Often when people go through a divorce, their emotions are tied up. The questions on their mind are “how does this marriage end?” and “what do I get financially?” When they do think about health insurance, they usually don't consider long-term care insurance (LTCi). Why is it so important for recently divorced or currently divorcing couples to think about long term care planning? Two reasons:
1. When spouses split, they typically lose their primary health care advocate, whether that translates to someone who provides hands-on care or the person who arranges for professional care.
2. Both parties will have a smaller pool of assets to fund potential long-term care expenses. For the higher-earning party, a long-term care event may impact the ability to meet spousal maintenance and child support commitments. For the lower-wage earner, it can create greater financial hardships, which can limit their care options.
Perhaps you’ve heard about the phenomenon known as the “grey divorce” and are wondering what it’s all about. An important study conducted by the Department of Sociology and the National Center for Family and Marriage Research at Bowling Green State University entitled “The Grey Divorce Revolution” addressed this issue. I was attending the Institute for Divorce Financial Analysts’ annual conference in Orlando where I saw Justin Reckers, do a presentation about the study and offered us a few insights:
Typically, those who are considered as going through a grey divorce are couples over the age of 50.
I recently attended a conference for The Academy of Professional Family Mediators in Memphis, Tennessee. One of the workshops I participated in was on elder care mediation, which gave some fascinating insights. A 2001 study, done by Debra B. Gentry, showed nearly 40% of adult children providing care for their parents reported serious conflict with siblings, usually related to a lack of sufficient help from those siblings. This study was part of an article entitled Resolving Middle Age Sibling Conflict Regarding Parent Care.
I very much appreciate working on divorce cases with a team, as it has so much value for clients. Mental health professionals can bring much needed clarity to very difficult situations. The following article, written by Howard Dructman, PhD and Marsha Schechtman, LCSW, Atlanta Behavioral Consultants, explains how the concept of parallel parenting works:
A literature search of peer-reviewed professional journal articles yields very few articles that contain references to parallel parenting.
We all hate the word budget. How many times have you had a budget that never worked and only made life harder? And when you didn't follow it, did you feel like you failed?
If a budget is done right, it will provide many benefits that are crucial when going through a divorce.
A budget is a guideline to help you forecast how your cash flow will look.
Having a budget keeps your priorities and values straight. Many times during the divorce you can get confused about what is important to you.
People have a range of preconceptions about divorce, the law, and the courts. In reality, going before a judge to air your grievances about your soon-to-be ex-spouse is rarely as satisfying as movies and television shows may have you believe. Mediation offers a private, cost-efficient alternative to litigation—but before you choose either venue, there are some guiding principles to keep in mind:
- Don't expect to “win” your divorce. People hope to beat their spouses in court, but seldom is there a winner in divorce.
Time flies when you’re having fun; here we find ourselves in a new year, with new challenges ahead—and of course our taxes are due. So let’s bring you up to date on some tax changes that we know of. (Remember this year could bring other tax changes that we don’t know about at this time).
One big change is that 1099s have to be into the IRS by January 31st of his year. In years past, they needed to be sent to the individual by January 31st, but into the IRS by February 28th.
Silver divorce, or grey divorce, is increasing at the same time when divorce among younger people is decreasing. This trend has necessitated innovative solutions to the problem of funding retirement, and one of the most useful—and misunderstood—tools in this regard has been reverse mortgages.
A reverse mortgage is an arrangement in which a homeowner or homeowners aged 62 or older receives a loan that is not payable until they sell the home. A reverse mortgage shields the homeowner(s) from seller’s fees, but leaves payment of property taxes and maintenance of the home with the homeowner(s).
The Association of Divorce Financial Planners held their annual conference this past October. One of the keynote speakers was Mary Beth Franklin, CFP, who is a contributing editor for Investment News. She spoke about the new Social Security rules and how to maximize benefits. Here is part of her talk relating to divorce:
If married at least 10 years and currently unmarried, you may be able to collect on your ex-spouse’s work record as early as age 62. Your benefits will not affect the amount your ex-spouse or his or her current spouse may receive.
I recently attended The Association of Divorce Financial Planners 2016 Divorce Catalyst Conference, held from October 27-29. There were a number of excellent speakers and interesting topics presented over the three days:
The keynote speaker was Jeff Brend. Jeff is an attorney who specializes in family law and is a fellow of the American Academy of Matrimonial Lawyers (AAML). The topics for the day included:
One of the things I have learned over the years is that I cannot be a Jack-of-all-trades and a master-of-none. In today’s ever-changing world, we need to have connections with professionals in other disciplines and specialties. This is especially true working in the divorce area.
In the past, it was the attorney’s job to do everything. Today divorcing couples are starting to pool the expertise they need into teams of outside experts. In addition to attorneys, they are using financial specialists, mental health professionals, and child specialists.
In my last blog, I had an article by Scott Evans about ARM Rates. This is a continuation of mortgages. Scott Evans wrote about Home Equity Line Resets.
Home Equity Line Resets
For some, other looming issues are Home Equity Line of Credit (HELOC) loans that were taken out between 2006 and 2008. A typical HELOC provides a 10-year interest-only payment option but then will convert to a fully amortizing 15 or 20-year loan (where you would be paying the principal back).
One of the things I have learned over the years is that we cannot be a Jack-of-all-trades and a master-of-none. In today’s ever-changing world, we need to have connections with professionals in other disciplines and specialities. This is especially true working in the divorce area.
I think it is important that we do the same thing and have our own list of specialists. The article below is by Scott Evans, CCIM, CRMS of the Family Mortgage Team, LeaderOne Financial Corporation in Marietta, Georgia.
The simple answer to the question of why you should choose the collaborative process for your divorce is that it preserves the family relationship. Clients that have engaged in the collaborative process have said the following regarding their experience with collaborative divorce:
- “The collaborative process gave me the opportunity to control my own destiny.”
- “My children were not forgotten in the divorce; this process ensured they had a voice.”
- “The partnership between the legal, financial, and mental health professionals worked wonderfully for our entire family.”
Mediation begins when couples make the decision to divorce, then choose a mediator. Mediation has several advantages, including the fact that divorcing couples remain in control of their own fate, giving them the power to make important decisions concerning their children and their property. Mediation is also:
- A controlled discussion intended to create a jointly beneficial resolution for a divorcing couple.
- Facilitated by a neutral third party mediator, and could include individual representation for each spouse, as well as expert resources available to answer questions regarding real estate, finances, or even children’s scheduling,
When we were young we thought our parents were indestructible. They played with us in the yard and on the floor. They climbed ladders and would clean out the gutters every fall. As we grew older, we became more indestructible and watched as our parents became more cautious and careful. Then we started having our families and children (their grandchildren), and we started realizing we were not so indestructible either.
Divorce is a difficult experience to go through. Besides the emotional toll, there are lots of little details you have to remember to take care of.Some of those details include:
•Completing any title transfer assets (preferably before the divorce is finalized):
•Stock or equity rights in a business;
•Life insurance; and
•Residence and another real estate.
•Terminating joint liabilities:
•Lines of credit;
Divorce professionals are keenly aware that each state passes and enforces its own set of laws. What is less known is the existence of the Uniform Law Commission (ULC)—and how it is leading the way for a consistent application of collaborative law throughout the country.
The ULC works by identifying which aspects of a hypothetical statute—in this case, a collaborative law statute—are essential and which are undesirable. From there, a model bill is drafted and proposed to the states.
Thank you to Melody Richardson of Richardson, Bloom and Lines, LLC of Atlanta, for our first book review. The book being discussed is Dr. Howard Drutman’s book “Divorce: The Art of Screwing Up Your Children.”
Dr. Drutman’s sardonic new book, “Divorce: The Art of Screwing Up Your Children”, is a “how-to” book for parents who have become so embroiled in the battle with their children’s other parent that they have become blind to how that battle is screwing up their children.
On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 was enacted. It extended permanently more than 20 key tax provisions. As well, some of the tax provisions that expired at the end of 2014 were extended for five years. Here are just a few of the extensions:
- Charitable contributions can be made of IRA proceeds (up to $100,000 per year) for taxpayers aged 70.5 and older. It will allow IRA distributions including required minimum distributions to be made directly to a charity.
Taxes are one of those unavoidable things that we have to deal with every year. The deadline stays relatively the same, but many of us nonetheless find ourselves scrambling to gather our documents. The reasons for this are as varied as the taxpayers themselves, but many times it simply comes down to being disorganized and lacking time management skills. If you are in no way ready to file your taxes, it may be time to file an extension.
When couples get divorced, they can be respectful and cooperate with each other, but that does not mean the IRS will make it easy for them.
Dividing property, and receiving alimony and other assets along with child support, can be complicated.
Division of Assets and Liabilities
- The marital residence: Most of the time a quitclaim deed is not an obstacle to transferring the title from one spouse to the other spouse; who is on the mortgage is more important.
Though I typically discuss issues related to divorce, elder financial abuse affects families of all types and should be guarded against.
Elder financial abuse is on the rise. Many seniors, regardless of their income bracket, are at risk as people over age 50 control over 70% of the nation’s wealth. The definition of financial exploitation varies from jurisdiction to jurisdiction but is broadly defined as the illegal or improper use of the property, assets or funds of people 60 and older. This can include:
If you got divorced in 2015 or are preparing to divorce in 2016, a budget can become a road map for your financial well-being. Here are some tips to makes budgeting easier:
- Ensure you have broad categories in your budget. Too many details make budgeting more difficult than it needs to be.
- Pay yourself first—include a savings account category in your budget. Take care of yourself and your needs, as well as the household.
It has long been known that the first Monday of January is considered “Divorce Day.” The Christmas tree comes down, and so does the hammer, although the seed is often planted by one of the spouses before the holidays. According to some estimates, divorce inquiries rise by 300% during the month of January.
Research on 500 divorcees commissioned by a family law provider showed that men are marginally more likely than women to hold off on proceeding with a divorce until after a family occasion.
A new year is upon us, bringing with it changes to our tax laws.In order to avoid any trouble with the IRS, plan ahead for these changes.
Penalty for the uninsured
Under the Affordable Care Act, individuals who choose not to get health insurance through government exchanges or through their employers have to pay an additional tax. If, in 2015, you didn’t have health insurance, you’re going to pay the higher of these two amounts:
Click here to read Robert Bordett's full article...
- 2% of your yearly income above the tax filing threshold (generally about $10,150), up to a maximum cost of the national average premium to purchase a bronze plan on the federal healthcare exchange; or
If you divorce in 2015, there are a few important things to be aware of in order to avoid potential hassles. Use this quick cheat sheet well in advance of the filing deadline:
- Know your filing status. If you divorced anytime before and up to December 31, 2015, you are considered divorced for the entire year. There is no “part-time married filing jointly” category. You’ll either need to file as single or head of household, if you qualify.
- Review your settlement agreement in order to determine who can claim the children as exemptions.
- Ensure you have an IRS form 8332 signed, if required. This form is the release of claim to exemption for a child of divorced or separated parents. A copy of this form must be attached to your income tax return in order for you to claim the tax exemptions for children not living with you.
If you have been divorced at any time in 2015, there are specific pieces of information you need to be aware of before tax time arrives:
- Who claims the children? Prior to 2009, you could specify in a divorce decree which parent claimed the dependency exemption; since then, it is no longer an option to use a divorce settlement agreement to backup your claim of dependency. Instead, you must use IRS Form 8332, entitledRelease/Revocation of Release of Claim to Exemption for Child by Custodial Parent. This form must be signed by the custodial parent, for use by the non-custodial parent, and be attached to each person’s tax return. As well, some parents choose to alternate who can claim the dependency from year to year. Each qualifying child must be under the age of 19 at year-end and live with the parent more than half of the year in order to claim the exemption. The exemption also applies if your child is under age 24 and is a full time student, defined as attending school for at least part of five calendar months during the year.
It’s conference and continuing education time again. This year the Association of Divorce Financial Planners (ADFP) had a joint conference with Center for Mediation & Training, which is located in New York City. The Keynote speaker was Jean Chatzky, a personal finance expert, best-selling author, and the financial editor for NBC’s Today Show. There were several other main speakers, including Robert Pokorski, MD. He is the Vice President & Medical Director for Prudential.
His talk was on protecting against non-financial retirement shocks. The five areas he covered were:
One of the sessions I attended at the Association of Divorce Financial Professionals (ADFP) conference this year was “Everything You Didn’t Know About Social Security” presented by Jacqueline Roessler, CDFA and Melissa Joy, CFP. Their presentation covered the basics of Social Security, including:
- The Complexities of Divorce Planning
- Benefit Calculations
- Maximizing Benefits
- Spousal Benefits for Divorcees & Claiming Strategies
- Income Equalization for Grey Divorcees
- Social Security Bridges in Pension Plans
- Remarriage Decisions
- Revisiting Claiming Strategies for Amicable Divorcees