Keeping Finances Afloat During a Divorce

Quite frankly, in this economy, many people are staying in marriages that they otherwise would not due to the financial hardship that often results when a divorce case is pending. But, for those who decide to file for divorce, there are ways to try to keep the cost of a divorce down; in June there was an interesting article in the Wall Street Journal entitled "Keeping Finances Afloat During a Divorce."

The article starts out by pointing out that Jon & Kate's separation (yes, Jon and Kate Gosselin) is the "news of the moment." That was June, this is October. Now Jon & Kate are the always-in-your-face news of most moments, whether we really care or not. Most recently, what we are hearing in our gossip outlets (and yes, US Weekly) is that Jon took $200,000.00 out of an account, and Kate wants it back. Now, many of us do not have $200,000.00 sitting, liquid, in an account. And if you are one of those who does not, the article gives some tips. And, I will add some of my own.

The first tip, though it seems like a no-brainer to most, is to be an educated consumer. Do your homework. Get a referral from someone you know that has been through a divorce, or a friend who is an attorney, or check with your local or state bar association (Kane County Bar Association, McHenry County Bar Association or the Illinois State Bar Association). Schedule a consultation with the lawyer. Ask ALL of your questions, including those about costs and fees. Make sure if you hire that lawyer that you feel comfortable with him or her and that you feel you are on the same page regarding the direction you would like your case to head. But, also know that oftentimes divorce cases head in the opposite direction that you might have anticipated, so be prepared for that and have a gameplan.

Another option is mediation. In Kane County and McHenry County, the court will order mediation if custody is at issue (sole v. joint, residential custody, or parenting time). Mediation is not court-ordered for financial issues, but if the two spouses agree, a financial mediator may be quite helpful. Financial mediation is not the answer in all cases, but if both parties are well aware of the financial picture and are on a level playing field emotionally, it might be an option to consider. Also ask your attorney about mediation, and get the feel from him or her. Some attorneys are pro-mediation while some are more skeptical.

Another option is to avoid cashing out assets. Instead, divide assets in kind and wait for them to regain value before cashing in on their liquidity. Also make sure that the tax exemptions (for the children, if any) are taken by the parent who can best utilize the exemption. And if need be, place a clause in the Agreement for that to be revisited, should the need arise or circumstances change.

Try, and yes it will be difficult, to use your lawyer as your lawyer, and not as your therapist. Odds are your lawyer charges more than a therapist, and we don't have degrees in psychology (well, most of us don't...Mr. Schwarz is an exception)!

And above all, as the article says: be cooperative and be realistic. My advice? Understand, and talk to you lawyer, about what the law is; ask what you would likely get asset-wise and support-wise, under Illinois law. Know what you are asking for, and what it might cost to get that (for example, you might REALLY want that big-screen TV that cost $750…but do you want to spend $1500 to get it)? At the same time, you should not back down on certain issues just to save money on fees; if you are entitled to something under Illinois law, you should not be scared to ask for it.

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Pension Beneficiaries: Change 'Em after Divorce

The Supreme Court issued a decision this year that significantly affects those participating in pensions. The Court, in Kennedy v. Plan Adm for DuPont Savings and Investment Plan, 129 S Ct 865 (2009), held that, even though the ex-wife had waived any and all interest in her ex-husband's pension plan pursuant to the divorce decree, because the ex-husband did not change the plan beneficiary from his ex-wife after the divorce was finalized, the ex-wife was entitled to his pension benefits. In effect, the Court held that ERISA controls, not the waiver contained in the divorce decree.

Lessons? Get all of the forms from the plan administrator and get them signed by the necessary parties; AND make sure that you put language in the agreement (incorporated into the divorce decree) that the party waiving all rights to the plan must sign all documents necessary to effectuate that waiver.

Otherwise, the plan participant might end up giving the ex-spouse a little more than he or she bargained for....

A Useful Divorce Reference: A Woman's Guide to Investing

When parties divorce, one of the "tasks" that must be completed is the division of assets. In Illinois, marital property is divided equitably, which is not necessarily equally. There are several factors the Court considers when allocating assets, including the length of the marriage; generally, where there is a long-term marriage, the property settlement weighs in favor of the party who has the lower earning potential. Unfortunately, often the party who has the lower earning potential simply does not know what is there as far as marital assets are concerned. Thus, one of the first steps in a case is simply to determine what the parties have to divide (the legal term for this is discovery). Once both parties know what assets they each have, it becomes much easier to attempt to negotiate the division of assets.

Often, certain "assets" are disclosed and one party does not understand if the asset even has value (example: life insurance policies). A Woman's Guide to Investing is a good reference for questions of this type.

In addition, once the divorce is finalized, it can help determine what is best to do with the assets received in the Judgment. Certain chapters such as "Introduction to Investing," "Principles of Planning" and "Working with Advisors" may be quite helpful.

And, as always, despite the title of the book, I believe the advice contained therein is chiefly gender-neutral. It certainly is not always the case where the woman is the party in a divorce that is in the dark regarding assets.

Two Moms, Two Dads and a Baby!

I found an interesting article on findlaw.com regarding two gay couples vying for custody of a toddler in Florida.

http://blogs.findlaw.com/law_and_life/2009/07/two-moms-two-dads-and-a-baby-sperm-donors-birth-certificates-contracts.html?=features

It's interesting because of the unique family dynamic, the rights given the "father" due to his inclusion on the birth certificate, and to give an example of how lives change...and as a result, it teaches a lesson: make sure the agreement, legal document, or other instrument of intent states exactly what you wish it to, as you might feel differently in months, or years: will you be able to make the necessary changes in the future when you need to, without difficulty or a legal battle?

Do I Really Need an Attorney in Kane, McHenry, or DuPage County for my Divorce?

My spouse and I have decided to divorce, and I believe we have an agreement on all issues. Do we need attorneys?

Although an attorney is not required by the court in Illinois to obtain a divorce, Judges hold each party to the same standards as if they were attorneys. It is always advisable to have legal counsel to guide you through the divorce process, especially if you have children or assets. The Illinois Supreme Court has put certain rules in place that govern custody matters and the law regarding the division of assets in a divorce is complicated and ever-changing. Even if you believe your case to be very simple, an attorney will ensure that your case is handled smoothly, and often it will be completed much more quickly than if you were to handle the matter on your own.

Further, spouses who believe they have agreements on all issues often eventually have disputes regarding certain matters before the divorce is finalized. An attorney will be able to provide advice regarding a proper resolution. Remember that the agreement you reach on financial and custody issues must be put into a legal document, and this document must be free of mistakes and oversights or you may be required to return to court in the future to further litigate the issues. Attorneys who limit their practice to divorce matters draft these documents regularly, therefore it is much less likely you will have to return to court to relitigate.

What should I ask the attorney during the consultation?

Because the process is often confusing and you will have many questions, it may help to make a list before you meet with an attorney. Inquire whether the attorney utilizes paralegals who bill at a lower rate than an attorney, the retainer fee requirement, the projected timeline of your case, and ask about any special requirements if children are involved in the divorce.

What should I bring to the consultation?

Bring any documents that you feel are relevant to your case, including financial statements, prior court orders and pleadings (if any). Alhough you do not need to discuss the exact balances in your accounts during the consultation, approximate account balances will help in discussing the timeline of your case. If you are unaware of the balances or even what accounts exist, do not worry; your attorney will be able to obtain that information for you after your case is filed.