Financial Issues

  • Getting the Financial Help you Need in a Divorce

    March 11, 2014

    Every divorce involves a division of the family assets and debts.  How this division occurs will affect the future of both parties and their children.  So it is critical that both parties fully understand the consequences of their financial decisions.  How can you best address these issues?

    In the Collaborative process, a trained financial neutral is brought to the Team to assist the parties in reviewing their finances.  Both parties will share all their financial information and will provide information on their joint expenses.  The expert will provide various scenarios for distribution of assets and debts. This will take into consideration the needs, goals and interests of each party.  Tax consequences will also be considered.  Armed with full knowledge of the family investments and property, as well as the debts, the parties will be in a strong position to make decisions concerning their financial future.

    In mediation, the parties are urged to meet privately with a joint financial expert or to consult individual advisors.  Again, it is critical that the parties share all of their financial information, including investments, property values, college and retirement savings and debts.  They are encouraged to prepare budgets that reflect the marital expenses and their individual expenses going forward.  This will allow the financial expert to assist in recommending options for the division of assets and for alimony and child support, if applicable.

    When one or more parties owns all or part of  a business, the financial expert is essential in determining the value of the business and its cash flow.  The cost often keeps couples from having this done, but doing so avoids inequitable distribution of assets and possible future litigation.

    Mediators, even attorney-mediators, are not qualified to provide the financial information that CPAs or CFPs can provide.  Their input assists the attorneys, the mediators and the clients.

    For more information on mediation and Collaborative Practice, contact Risa A. Kleiner, Esq. at 609.951.2222 or by email at risa@rkleinerlaw.com

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  • Understanding NJ Child Support

    February 24, 2014

    New Jersey has presumptive Guidelines for child support in a divorce.  The Guidelines are used if the combined net family income is $187,200 or less and the children are under 18 years of age or over 18 and living at home while attending college.  Good cause must be shown for a court to deviate from the Guidelines, but parties who mediate their divorce or resolve the issues through negotiation can agree to an amount which is different from the Guidelines.

    The cost of health insurance for the children is included in the child support calculation so that it can be allocated between the parties.  The cost of work-related childcare for the Primary Parent may be included in the calculation or it may be allocated separately.  Because childcare costs often vary from year to year, many parents opt to handle this cost separately.  

    To start the Guidelines calculation, you need to know the annual gross income for each party, the amount of any mandatory deductions (such as union dues) and the amount of alimony, if any, that will be paid and received.  The program automatically calculates the anticipated federal and NJ income taxes and arrives at a net annual income for each party.  The total estimated cost to cover a child’s share of the shelter, food, clothing and personal expenses is then automatically calculated and allocated proportionally between the parents.  

    The Parent of Alternate Residence (previously known as the Non-custodial parent) pays his or her share of the child support to the Primary Residential parent.  While the Primary parent does not “pay” child support, it is assumed that his or her share of this cost is being spent for the benefit of the children when their mortgage, taxes, insurance, food, clothing, etc. are paid for.  Some expenses, such as private school, camp and larger activity fees are often shared and paid separately from child support.

    Child support can be paid directly or through the Probation department of the court in the county in which the divorce is venued.  If paid through the court, parents have online access to their account and can track their payments.  A wage garnishment may also be requested to insure payment.  Probation will automatically enter a Judgment if any arrears accrue and will initiate enforcement proceedings upon request. 

    For further information, contact Risa A. Kleiner, Esq. at 609.951.2222 or by email at risa@rkleinerlaw.com

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  • Is Mediation Right for Me?

    October 7, 2013

    If your answer to the following 10 questions is “yes”,  mediation is a good option to resolve your divorce issues.

    1. Do my spouse and I want an amicable divorce? 

    2. Is my marriage free of domestic violence? 

    3. Can my spouse and I sit across from each other at a table and talk civilly with the mediator and each other about our divorce issues? 

    4.  Do my spouse and I want to resolve our issues without going to court?

    5. Do we want to protect our children from a protracted and adversarial divorce?

    6. Do we want to move through the divorce process relatively quickly and keep fees to a minimum?

    7. Do we want to keep our discussions private and confidential?

    8. Are we willing to be transparent and provide all our financial documents to the mediator and each other?

    9.  Do we understand that the Mediator will prepare a Memorandum of Understanding, but that nothing is final until we have signed a Settlement Agreement?

    10.  Do we understand that the mediator can provide options and alternatives but cannot provide individual legal advice?  (Individual legal consults are recommended for each party before the Agreement is finalized.)

    If you answered “yes” to all the above, mediation is a good option for you.  Feel free to review my website www.rkleinerlaw.com, call Risa A. Kleiner, Esq. at 609.951.2222 or email her at risa@rkleinerlaw.com for more information.

     

     

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  • Saving for College – UTMA vs. 529 Plans

    September 23, 2013

    Many parents open an UTMA account for their child with the intent of saving for college.  Is this the best way to go? 

    The UTMA  is opened in the child’s name under the child’s social security number.  Many parents do not realize that the deposits into an UTMA constitute an irrevocable gift to the child.  Once funds are deposited into the account, the money belongs to the child.  Although the custodian of the account can select and manage the investments, the money no longer belongs to him or her.  Withdrawals can be made only for the benefit of the child.  More importantly, when the child reaches the age of majority (21 in NJ), the custodian is required to turn over the funds to the child, who can then spend the money any way he or she chooses.

    Consulting a financial professional before investing for college will save you from choosing a vehicle that does not meet your goals.   529 Plans may be a better choice.  In the meantime, if you have opened an UTMA for your child, professional advice can help you invest the funds wisely. 

    In a Collaborative or mediated divorce, a neutral financial professional can be consulted by both parties to assist them in making important decisions such as how to invest for their children’s college.

    For more information about Collaborative Divorce and mediation, contact Risa A. Kleiner, Esq. at 609-951-2222 or by email at risa@rkleinerlaw.com

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  • Timeshares and Divorce

    August 23, 2013

    Splitting the property in a divorce includes figuring out what to do with that timehsare – can it be sold? who will keep it?  who will pay the annual fees?  who will use it?  This is a particular problem if neither party wants to keep it.

    Because timeshares have been around since the 1970′s, there are literally hundreds of thousands of units out there.  It can be difficult to sell a timeshare since you are competing with new ones offered by developers every year.  If, as often happens, neither party wants to keep the timeshare after the divorce, you can contact the place you bought it and find out if they will buy it back.   If they agree, it will likely be at a significant discount off the original price.  (See Star-Ledger, Business Section, p.1, August 19, 2013.)

    You could also try to sell your timeshare through a broker or listing service.  But beware of upfront costs with no guarantee of an eventual sale.  Walking away from the timeshare is usually not a viable option since the parties signed an initial contract in which they agreed to pay the fees and/or loan costs.  Failure to pay could jeopardize your credit.  An option of last resort (no pun intended) may also be to deed-back the timeshare to the developer – if they will accept it.

    Because all of the above options are tenuous, parties to a divorce often agree to keep the timeshare and use it in alternate years and alternate paying the annual costs.  If there is an outstanding loan, the loan payments would also be shared.  While this is not a perfect solution, at least both parties (and their children) will be able to  use the timeshare until it can be sold.

    Please contact Risa A. Kleiner, Esq. at 609.951.2222 or by email at risa@rkleinerlaw.com or further information on distribution of property and other divorce issues.

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  • Life Insurance After Divorce

    April 23, 2013

    The case: Husband died in 2008, leaving a life insurance policy purchased in 1996 with his former wife still listed as beneficiary.  Although Husband and ex divorced in 1998 and Husband remarried in 2002, he never  changed the beneficiary of his policy.  Current wife sued in Virginia where State law automatically revokes a divorced spouse as a life insurance beneficiary in favor of the widow or widower.  Lower court awarded the insurance proceeds to the widow, but the Virginia Supreme court reversed.  The policy had been obtained through a federal insurance program and the court held that federal law, not state law governs.  Benefits therefore reverted to the original beneficiary – - the ex-wife.

    Status: This case is now on appeal to the US Supreme Court.  Widow is arguing that the State, not the federal government, should govern domestic relations issues.  Arguments will be held before the court on April 29, 2013.  Look for a decision in the months to come.

    Moral:  NJ has no law automatically revoking the former spouse as a beneficiary of life insurance or any other accounts.  And the moral of the story is clear.  Beneficiaries on life insurance policies, financial and retirement accounts should always be updated after a divorce.  And a new Will should be drafted.  The entry of a divorce should be the catalyst to update your financial life and documents.   Otherwise, the intended beneficiary may not receive the funds as intended.

    For more information about divorce or to set up a consultation, please contact Risa A. Kleiner, Esq. at 609.951.2222.

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  • Reasons to Mediate Your Divorce

    August 17, 2012

    There are many reasons why mediation is a great option for resolving divorce issues.  Here are a few:

    1. Mediation allows you to design a customized settlement that works for you and your family.

    2. Mediation is confidential.  All discussions take place in the mediator’s office and the mediator can never be called to testify about those discussions.

    3. Mediation promotes communication.  Talking through divorce issues provides a model for working out issues that may arise after the divorce.

    4.  Mediation is faster than litigation.  The couple sets the schedule and often cases are finished in just a few months.

    5.  Mediation is cost effective.  With no court apperances, no formal discovery and no waiting for court schedules, clients save on their counsel fees.

    6.  Mediation is guided by a trained mediator — a neutral professional who helps clients by suggesting options, alternatives and solutions.

    7.  Mediation is voluntary.  If, for any reason, the process doesn’t work for you, you can opt out at any time.

    8.  Mediation encourages both parties to get independent legal advice which helps them negotiate their agreement.

    9.  Mediation is convenient.  Sessions are scheduled with the mediator on your time schedule.

    10. Mediation is less stressful.  With reduced cost and time, a calmer atmosphere and assistance from a trained mediator, stress is significantly reduced.

     

    To obtain more information or to schedule a mediation session, contact Risa A. Kleiner at her Princeton office at 609.951.2222 or by email at Risa@rkleinerlaw.com.

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  • Divorce and Retirement

    July 26, 2012

    Seventy-five percent of Americans close to retirement age in 2010 had less than $30,000 in retirement accounts. According to a New York Times Op-Ed piece from July 22, 2012, if you want to maintain your lifestyle after retirement, you will need 20 times the amount of your annual income in addition to your Social Security Income. These figures do not take into account extraordinary healthcare costs or unforeseen financial catastrophes.  And they assume you will only live for 20 years after retirement!

    Those who divorce are often in even more dire financial straits.  The funds they thought they would have to live on in retirement are severely depleted due to the cost of the divorce itself and the fact that assets are divided between the parties in a divorce.  Often, those over the normal retirement age must continue to work to supplement their savings.  But not everyone has the ability or employment opportunities necessary to create a meaningful income stream after 65. 

    Late-life divorces are becoming more common.  And the financial impact of a divorce can be devastating since there is less time to make up for depleted assets.  If a divorce is unavoidable, you need to do everything possible to minimize its costs – both during and after the process.  That includes doing your utmost to avoid litigation where the costs are high and the outcome uncertain. 

    By using mediation or a Collaborative Divorce process, you have an opportunity to resolve financial issues  for the benefit of both parties and at a lower cost.  By selecting neutral experts, you can avoid paying tens of thousands of dollars for competing opinions and extended testimony.  By choosing an out-of-court process, you avoid long delays and the enormous cost of formal discovery.  You can benefit from your attorney’s legal advice without having to bear the burdensome cost of court time.  

    Your goal is to be part of the 52% of Americans who say they will be comfortable in their retirement.  Your goal is not to deplete your retirement funds in a divorce.

    For more information on Mediation and Collaborative Divorce, contact Risa A. Kleiner, Esq. at 609.951.2222 or risa@rkleinerlaw.com

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  • Divorce Over 50

    June 15, 2012

    According to a recent article in the AARP Bulletin, while overall divorce rates have decreased, the divorce rate for those over 50 has doubled since 1990.  Even more startling is the fact that 60% of remarriages fail for those over 50.

    “Gray divorce” as it’s come to be known means that one of three baby-boomers will be single as they age.  A psychologist at the Fmaily Institute at Northwestern University calls late-life divorce an “epidemic.”  The consequences can be devastating .  Divorcing later in life makes it difficult to recoup the financial impact.  And many wives who have a limited work and earnings history will need to rely on only half of their spouse’s social security income.

    On average, 20% of widowed, divorced or never married women experience a high rate of poverty in their retirement years.  Older men do better financially, but not as well socially.  They often have difficulty recreating the social networks they enjoyed while married. 

    If you are divorced after a marriage of at least 10 years, you are permitted to claim social security based on your spouse’s wages if you are not entitled to a higher benefit based on your own work.  You can start taking social security at age 62 at a reduced rate, even if your former spouse waits until full retirement age.  There is no impact on the social security benefits of the higher earning spouse if the divorced spouse claims these benefits. 

    While there is no one solution to these problems, careful financial planing in a late-life divorce, along with a concern for the future welfare for both spouses, can lessen the financial hardship.  Instead of draining joint resources with a costly litigated divorce, couples over 50 would do well to consider Alternate Dispute Resolution — either mediation or Collaborative Divorce.  Both less costly and less emotionally draining than litigation, mediation and collaborative divorce take both parties’ needs into consideration.   

    For more information on Mediation and Collaborative Divorce, contact Risa A. Kleiner, Esq. at 609.951.2222 or by email at risa@rkleinerlaw.com

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  • Low Cost Divorce Mediation

    August 15, 2012

    For divorcing couples who may not be able to afford the hourly rate of many mediators, the New Jersey Association of Professional Mediators (NJAPM) is offering divorce mediation at a reduced cost.  The program pairs a qualified couple with an Accredited Professional Mediator and an apprentice.  For $150 per hour, about half the usual cost, couples can have their divorce issues mediated.  At the conclusion of the process the couple will have a written Memorandum of Understanding which summarizes the agreement they have reached. 

    To qualify for this program, a couple must have a combined annual gross income of less than $120,000 and no history of domestic violence.  Most mediations take between 2 and 5 sessions and cost far less than a litigated divorce.  Issues of custody, parenting time, division of property and support are addressed by the mediator.  Sessions are held in the mediator’s office and are completely confidential.

    Applications may be found at www.njapm.org.  Look for the box on the right side of the Home Page that says “Divorce Clinic.”  Or you may call NJAPM at (800) 981-4800 for further information.

     

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