SHOULD I STOP CONTRIBUTING TO MY RETIREMENT ACCOUNT?

Should I stop contributing to my retirement account since we’re getting divorced? If this question has ever crossed your mind, don’t feel like you’re being sneaky. You’re not alone – nearly every client who comes to our offices asks this question. If your divorce court has not already issued an order restraining either spouse from changing retirement contributions, which many do at the outset of the case, then you do have options; and, if you are not yet divorcing, you have even more. Of course, you should always discuss your options with an attorney and, preferably, a financial planner, too. But there are common, universal pros and cons to changing retirement contributions. Here are a few:

Enrollment/Plan Periods: Check your plan for defined periods of time in which you can enroll, terminate or change your contribution amounts. For personal retirement accounts unrelated to your employment, this may be as simple as changing your deposit amounts online or calling your account manager. For employer-provided retirement accounts, the process can be more cumbersome, and you may find yourself having to wait for the new period to begin, and filing out several forms when it does. Check your plan, and you may find out the decision is already made for you.

Bankruptcy: If you are contemplating bankruptcy, you may want to continue your contributions. Generally, the more you have set aside in your retirement account, the better, because your retirement savings are exempt from liquidation in the bankruptcy court. This means, you do not have to use your retirement savings to pay your creditors, and you get to walk away from them with most, if not all, of your retirement savings in-tact. Beware, however, that you cannot cheat the system by pouring all of your money into your retirement account; the bankruptcy court may void the additional contributions and give that money to your creditors. If either spouse is headed toward bankruptcy after divorce, therefore, you may want to continue contributions at the maximum allowed amount – after discussing your options and risks with your divorce attorney and your bankruptcy attorney, of course.

Available Funds: Contributions to your retirement account are generally non-accessible, at least, not without paying taxes and penalties and/or proving a hardship. If you need funds during your divorce to pay temporary bills, such as rent for an apartment or attorney fees, you may want to temporarily discontinue your contributions. However, every extra dollar you have is an extra dollar you could be paying to your spouse as alimony or child support, or to your spouse’s attorney for fees, and may be counted as income for calculating long-term child support, alimony or ability to pay bills. So, if you are going to free up your funds by temporarily discontinuing your retirement contributions, be sure the funds go to a legitimate debt, plan to resume your contributions as soon as practicable (probably after your divorce), and be prepared to explain what the extra boost in your income should not count for long-term calculations.

Contributing Too Much: Do not pour every dollar into your retirement account in an effort to avoid paying alimony or child support. The divorce court may, and often does, assume that you are upping the contributions to avoid a support obligation, which you probably are, and will treat you as if you still have the dollars in your pocket. This means, you will be required to pay support at a presumably higher level, even though you do not have the dollars actually available at net income, and you may find yourself dipping into retirement, and paying taxes and penalties to boot, just to pay the support you could have paid had you not decided to contribute more.

Two Dollars In, One Dollar Out: In most states, each spouse’s retirement account is divided for the marital portion, generally meaning the value that accrued between the date of marriage and the date of divorce. The portion may be equal, or more or less, depending on your state’s laws and the factors in your case, and a prenup or postnup may govern how much, if any, to actually divide. As you begin thinking through the divorce process, you should start with the assumption that every two dollars you put in will result in one dollar going to your wife. Talk to an attorney about each spouse’s rights to a share of the account, as well as the manner and method of division (Does the now ex get cash? Does the now ex have to wait until I retire? Etc.) But keep in mind that, even if    the account is divided equally, you still have funds, one dollar for every two, for yourself, too.

And what about your spouse’s accounts? The same pros and cons apply. Make sure you are watchful of what your spouse does, so you get what’s due to you.

WHAT ABOUT THE LEASE? How to Pay Child Support Directly

You may have asked whether you can pay child support directly – or even done it – and received a stern no, do not do it, it is a bad idea, it does not work and it is not allowed under our laws  in response. For many cases, it is a bad idea, you should not do it, and it may not be allowed under the law that applies to your case – at least, according to the order that currently applies to your case. However, that does not make it impossible to pay child support directly, and, sometimes, it is a good idea.

Is it Possible?

By now, you have probably heard of child support “guidelines” or “formulas” or “calculators.” Since the early 1980s federal enactment of the Child Support Enforcement Amendments, all States receiving federal dollars to administer child support programs –currently, all of them -- must have a uniform method for determining how much child support to pay per child. The CSEA also established a national advisory panel on child support guidelines. The panel became a part of the federal Office of Child Support Enforcement. With the panel’s assistance, states were to establish numeric guidelines, also known as “child support formulas,” to calculate child support. The guidelines were to be advisory only. By 1988, the guidelines garnered favor, particularly because they were predictable. Therefore, Congress passed the Family Support Act. The FSA required states to make the guidelines presumptive, not advisory.

That is, the guidelines-recommended amount should be presumed the amount of child support to order, unless the payor and/or the payee establish that the amount is “unjust or inappropriate.” What is “unjust or inappropriate” depends on the nature of the case and the judge.

This is one method for deviating from the guidelines. Look for circumstances in which one parent assumes an extraordinary amount of debt (maybe the entire mortgage shortfall) or has a serious health condition.

Another is the method of payment. Even if the judge requires parents to pay the recommended amount, in most States parents remain free to determine the method of payment so long as neither parent owes support to the State (for example, for the time a child was in foster care).

Direct Pay – Third Party

One method is a payment to a third party who provides necessaries. “Necessaries” are food, clothing, shelter, education, childcare and other basic living expenses. Parents most often pay third parties to maintain control over a debt that is in the parents’ names or the paying parent’s name, and which would trigger a collection action and/or a poor mark on a credit report if not timely paid.

For example, you might prefer to pay the lease for the van awarded to your ex-wife because she uses the van to take your children to and from school, hockey practice, friends’ events, etc., and the lease agreement is in your name. This way, you know the payment is made and you provide a necessary – transportation – for your children.

As another example, you might want to pay for your children’s cell phones so that you can correspond with them at any time. Just be sure your judge treats a cell phone as a “necessary” and not an “extra.”

As a final, and most common, example, you may prefer to pay the home mortgage because you are the sole mortgagee and your children will reside in the home. This is one way to deal with a mortgage in one parent’s name for a home the other parent receives as a result of a settlement or a trial. Be sure your divorce decree specifies what happens if you cannot pay the mortgage, who claims tax benefits and whether either parent can renege on the agreement or request a modification upwards or downwards.

Whatever you do, do not pay a third party without permission from the other parent and            the judge in your support order. If you do not have this permission, then, in most States, your payment is a gift, and you will not receive credit for it. So, you could end up paying twice.

Direct Pay – Other Parent

Another method is to pay the other parent directly, rather than the State. States vary on options here, so be sure to speak with an attorney about the options available to you, but, in many States, the parent obligated to pay child support makes a monthly payment to the State Support Disbursement Unit (the “SDU” or the “IV-D agency”), which then allocates the payment between State-owed fees and child support, distributes it among the parent’s files (if the parent has more than one child owed support), then disburses it to the receiving parent. As you can imagine, this process takes time, sometimes months, and it is ripe for human error.

Parents in a bind, for example when a child has an unanticipated school expense, usually want support now. The risk is, you could make a direct payment out of the goodness of your heart – you are a parent, after all – but not receive credit for it.

You may prefer to pay your ex directly. That is ok, so long as your child support order allows direct payments and your relationship with your ex suggests the two of you will not fight, later on, about whether you actually made the payment.

Mistakes to Avoid

If you are contemplating direct payments, either to a third party or to the other parent, avoid these common mistakes:

Payment Without Permission – If you pay the other party or a third party directly and do not have permission from the judge, then in most States that payment is conclusively a gift, and you will have to pay the parent as specified in your support order anyhow. This means, you pay twice.

Using Cash – It may be a pain to write a check or set up a direct deposit from your account to your ex’s, but it is a must. Do not pay your ex in cash – you are asking for a disagreement in the future over whether you paid, how much you paid, and what your payment was for. A few dollars here and there may seem insignificant – would you really write a check for $20 for your child’s cough medicine? – but the “here and there” adds up. If you must use cash, you must obtain a receipt from your ex that specifies the date, the amount and what the payment was for.

Trusting You Ex – If you agree to pay the mortgage directly, do not give your ex the money with the understanding that she will make the mortgage payment as she pays the other household bills. You made an agreement for a direct pay method for a reason, and you need to follow it.  Who’s to say your ex will not keep the money, or make the payment late, or deny it altogether?

Forgetting “What-If”s – It may be a good idea to agree to pay the van lease, the mortgage, etc., directly now. You are in a stable job, have the money and want to keep this control. But, what happens if you lose your job? What happens if you want to sell the home? What if you ex becomes employed and you would otherwise qualify for a downward support modification? Be sure your support payment method contemplates these “what-if”s by including language that allows for support modifications, that specifies when and how direct payments terminate, that clarifies whether the parents intend for support to continue after the child reaches the age of majority, and so forth. The “what-if”s may never happen, but, if your agreement is to last, you must guard against them.

These are easy mistakes to make, but they are also easy to avoid -- with proper planning, that is. So, if you are contemplating direct child support payments, have a frank and thorough discussion with your attorney about your options and the law that applies to them.

Because making direct payments may not be such a bad idea afterall.

Three New Year’s Resolutions Worth Keeping: How to Avoid a Messy Divorce in the New Year

New Year, New You? As you prepare to ring in the new year, with weight-loss programs, sitcom debuts and end-of-the-year-gotta-buy-it-now car sales advertised everywhere you turn, divorce may be the last thing you associate with “a new you.” A slimmer you, maybe. A you who watches that new show on Wednesday nights, maybe. A you driving a brand new Mustang, more than maybe. But a new divorced you? Forget about it, right?

 

Not so fast. How about a richer you? A calmer you?  A you who just won his custody case because you were prepared?

 

As you reflect on the year that has passed and plan for the year to come, you should take time to think about where you are in your case, how far you have come and where you want to go, too.  If you are considering divorce, make a list of the reasons why and brainstorm ways to fix them. If divorce is inevitable, write down important information you will need to copy, such as your tax returns, and your goals for your case. If you are in the middle of divorce, reflect on the significant events that have occurred in your case, the outcome for each, and what you learned. If you have finished your divorce, review your documents and determine what you need to do to ensure you receive the property awarded in your decree. Talk to your attorney, or contact one specializing in family law like Cardelli Lanfear, and resolve yourself to make this new year a better year for your divorced or divorcing family, your wallet and your sanity.

 

No matter what stage of the divorce process you are in, these simple resolutions will help you avoid a messy divorce in the new year:

 

RESOLUTION #1: I WILL KEEP A PARENTING TIME JOURNAL

This one is for you parents. Your son or daughter probably tops the list of the most important people in your life, and you may have even uttered the words I will do whatever it takes to win custody  to your attorney. As a family law attorney, I commend you. It takes a tough father to ask why? of the often unstated, but still dominant, assumption that children should reside primarily with their mothers. But, also as a family law attorney, I can tell you that not every disagreement or problem you have with parenting with your wife or ex is significant enough to call your or her attorney. We want to hear and know about every problem, of course, but calling for each one will have you racking up a hefty legal bill and forgetting them when they do matter, at a hearing or trial. Instead, you should write them down so that you can discuss them with your attorney together and remember them when the time comes to testify.

 

I recommend my clients keep a parenting time journal. For a few dollars to purchase a notebook and a few minutes a day journaling, you can keep a valuable timeline for your case. If you are computer savvy, you can keep an electronic journal (just be sure to password-protect it). If you are a writer, you might update it every day. If you are not, you might just jot down notes when problems arise. Keep the journal in a secure place, such as a lock box, out of your wife’s or ex’s and your child’s reach. These notes are for you and your attorney only, and they can easily misinterpret them if you write in particularly venting passage, which you may. Some clients write “Attorney-Client Log” on the cover and address passages      to me so that the entire journal is more likely to be treated as attorney-client, and therefore confidential, communication.

 

Be careful with what you write, if you intend to use your journal when you testify. Testifying is                 a bewildering experience, what with the formality of the courtroom and an opposing attorney grilling you, and you may forget important details about events that you journaled. If you can refresh your memory by reading a passage, you may request to review it. If you cannot refresh your memory but are certain that your memory was accurate and the event new when you wrote in your journal, ask to use your journal as evidence of your recorded recollection. In most courts, you may use your journal for these purposes. However, your opposing attorney may also be entitled to read the passage you referred to and offer it into evidence-- including any rambling curse words you included when, for example, your ex denied your parenting time. That journal could turn from helpful to damaging. So, if you intend to use your journal to help you testify, always write as if the judge is watching.

 

Of course, always call your attorney for an emergency.

 

RESOLUTION #2: I WILL COPY WORK, MEDICAL AND OTHER IMPORTANT RECORDS

In a divorce, these records have a way of, mysteriously, disappearing. Sometimes, they make their way to your opposing attorney’s office. Sometimes, they get stuffed in a box with “move out” belongings. Sometimes they turn up in the trash. Or they just got lost. Whatever the reason, you may very well find yourself searching for documents your attorney requests, only to come up empty handed and have to pay for a third party, like a bank, to provide copies.

 

Make copies of local, state and federal tax returns (ideally, all of them, and at least the past 5 years so that you can establish an earning history); pay stubs (both yours and, if possible, your wife’s or ex’s);         bank and credit union statements (ideally a full year); IRA, 401(k), 403(b), pension and other retirement account records (ideally, for the history of your relationship); investment and stock records; deeds; appraisals; health, dental and optical insurance cards; birth certificates, passports and Social Security cards; and any other important records that identify you, your family and/or the property you acquired during and before your marriage.

 

Your copies will keep you and your attorney organized, and that is one of the easier ways to save money. You will not have to pay your attorney’s office to read and sort stacks of crumpled papers, subpoena third parties for what is missing, and weed out the relevant from the illegible or irrelevant ones. More importantly, you and your attorney can reference records during a hearing or trial with ease.

 

While you are making those health insurance card copies, be sure to note your coverage and speak to your provider upon the continuation of coverage upon your divorce. Before your divorce, use the health insurance available to you! (Strategically, I recommend my clients do this before we file for divorce so that any debts for co-pays, lab costs, etc., are more likely to be treated as marital debt to be divided between the spouses, rather than separate debt to be foisted on one party) Go to that annual check up. Fill your prescriptions. Have your eyes examined and your teeth cleaned. Talk to your doctors about your immediate and future health needs, what insurance to obtain and whether low-cost substitutes (e.g., generic medicine) are available.

 

The more organized and informed you are now, the less scrambling you will have to do during the divorce or post-divorce process.

 

 

 

RESOLUTION #3: I WILL NOT SAY WHAT I THINK, I WILL THINK BEFORE I SPEAK

One slip of the tongue can be the death knell for your case.

 

But isn’t an out-of-court statement hearsay? Not if it is your and your wife or ex offers it against your case. This is an admission.

 

An “admission” is a party’s out-of-court statement or assertive conduct used against him or her.      For example, defendant wife’s e-mail to her husband that she under-reported profits from her resale shop is an admission if plaintiff husband offers that statement against her (e.g., to prove that she earns more than she claims an is, therefore, not entitled to alimony). All jurisdictions characterize these statements as non-hearsay. Therefore, they are not subject to the hearsay rules, and the offering party need not find one of those tens of hearsay exceptions to apply before offering it into evidence.

 

The party may offer the admission into substantive evidence, i.e. to prove the matter asserted. For example, revenge-driven plaintiff wife’s lawyer could admit an e-mail of remorseful defendant husband apologizing for “gambling away our savings” or “taking that trip with my secretary because I didn’t care what you and the kids did at Christmas,” which husband thought wife would appreciate, this sincere apology, to prove that husband gambled the parties to debt or cares more about his new girlfriend than his children. Or, lawyer might have wife testify that husband often bragged about the cash he received under-the-table for cash sales at his family business to prove that he earns more than he says he does. Or, lawyer might print husband’s status updates and tweets, in which he ranted about “having to go to court with that B****” and “refusing to give her a dime” to prove that husband disparages his children’s mother.

 

Even if they are inaccurate, untrue or heat-of-the-moment and poorly-thought-out comments, these admissions will do considerable damage to your case. Once the judge or jury hears them, that is it. Although your lawyer may request a limiting instruction so that the statements apply for some things (e.g. the speaker’s credibility) and not others (e.g., the truth), it is impossible to forget a damaging statement. As the saying goes, “You can’t un-ring a bell.” Once they’re heard, they will not be forgotten.

 

Once your wife or ex hears them, you can bet she will not let you forget, either. Better to bite your tongue than exhaust your resources with letters between attorneys’ offices clarifying “what you really meant” or time in court explaining yourself away.

 

Always think before you speak, Will this sound good in court?

 

As the year comes to an end, resolve yourself to make these three changes – keep a journal, make copies of your records, and think before you speak -- and you could very well safe yourself time, money and stress enough to afford that new car and become a brand new you in the new year.

 

 

 

PLANNING FOR DIVORCE IN THE NEW YEAR – NOW – PART III

8. Interview Attorneys – The choice you make is an important one, because what we do will affect the rest of your life. It is okay to interview several attorneys before making your selection – in fact, we expect it. Look for someone who is articulate in the law and procedures in your area. How knowledgeable is this attorney? What is the attorney’s track record? Is the attorney easy to understand? Do you like the support staff? And so forth. You can begin with online research in your spare time, but always speak to the attorneys, too.

9. Write Down Your Goals, and Monitor Them – We have an excellent app that helps clients sort out their goals. Everything from the house to student loans to children to pets is included. There are a lot of things to think about, and sometimes – okay, most of the time – that thinking is overwhelming. But that is okay. Write down your goals, organize them, and then talk about them with your attorney. The simple process of writing down what you want will take away most of that stress you have just thinking about filing in January.

10. Find a Confidant – Find a trustworthy family member or friend to confide in during your divorce. There will be good days, but there will also be bad ones, and you will want someone other than your attorney to talk to when those bad ones come. Go with your gut instinct.

Take these steps to prepare now, and you really could have a brand new, better year - divorce and all - in the new year.

PLANNING FOR DIVORCE IN THE NEW YEAR – NOW – PART II

4. Research Housing – Except in rare circumstances, you should not plan to move out of your home – if you do, your budget will double, at least, you will lose parenting time with your children, and you cannot control what happens to your belongings, or your children, that you left behind. However, you should start researching housing options now. Perhaps you will remain in the home but will refinance – what do you need to do so? Perhaps you will sell the home – who will you use, and will you make a profit? Perhaps you want to rent a home in your children’s school district – so get on the web and start searching for a home.

5. Start a Separate Bank Account – Separate accounts are a delicate issue. You should not tell your spouse that you are opening a separate account, but you should also not expect to keep it a secret throughout your divorce. You will be required to disclose it. But, if you open an account and start putting money in it too soon, you send a giant red flag with the letters D-I-V-O-R-C-E waving at your spouse. Clients often ask us, when should I open the account, and how much should I put in it? Generally, and subject to the facts in your marriage, you should open the account before you file and deposit about one-half to enough to pay the family bills into the account a day before or, ideally, immediately before filing. You are not setting this money aside so that you can hide it or keep it – you are setting it aside so that it is protected and available to pay marital expenses so that your spouse does not pocket it all.

6. Check Your Credit – You can run a free credit report annually online. Look for any missed or late payments, as these are often a sign that your spouse, who was supposed to be paying the bills, deposited your paycheck somewhere else. Also look for debts in your name that you were unaware of, such as credit cards that are issued jointly to husbands and wives. Keep this report with your financial records (more on that above) for your attorney. Beware, however, that you cannot run your spouse’s report without his or her express permission – it is a federal crime if you run the report without it.

7. Spend Time Parenting – If you have children, enjoy this holiday season with them doing normal things you would do if divorce were not on the horizon. Go sledding. Make dinner. Watch movies and play video games, etc. Keep track of what you do and when. This will have many benefits – first and foremost, it’s time with your children; in addition, you have a record of the everyday things you do with them, which the judge will consider when issuing a decision for child custody and parenting time if you and your spouse cannot agree. So, get in the habit of keeping a journal now. It does not have to be like your daughter’s diary, which you update everyday with pages and pages of notes. But it should include the date, place, event and people who were present. Some client even use a calendar app to type their notes.

more to come in Part III...

PLANNING FOR DIVORCE IN THE NEW YEAR – NOW – PART I

During the holidays, divorce may be lingering in the back of your mind - but, if you are like most folks, it is probably not at the top of your “to do” list.

This is not to say that filing for divorce during the holidays is a bad thing. Actually, it is sometimes a good thing, or a necessary one. For example, you may need a temporary custody order to keep your spouse from leaving to Florida with your children “to visit family,” never intending to return. Or, you may need a restraining order to keep your spouse from racking up an astronomical credit card bill for “gifts” he or she will end up keeping when you do divorce.

But these are, despite the rumors, relatively rare scenarios. Some folks will file for divorce and wait to serve, if local rules allow, until after the New Year. But most, having lived with a broken marriage for a long time anyhow, would rather wait for January, in those ripe few weeks between Near Years Day and Valentine’s Day, to file.

The hustle and bustle of the holiday season may even be a wanted diversion with family before this sometimes intense process called divorce begins.

However, even if you do want to wait for the new year to divorce, now is the time to plan. Here are the steps you should take now to make the process easier:

1. Consult a Mental Health Professional and/or Clergy – That’s right; this divorce attorney is recommending you talk to a mental health professional or clergy member, or someone else you trust, about options other than divorce. Divorce can be, and often is, a difficult process, and if reasonable alternatives exist that can make you and your wife a happily married couple again, you should consider them. This may include couples’ therapy, individual therapy, family therapy, religious education, or something as simple as planning a weekly date night. For marriages that feel irretrievably broken, hopeless, we often discover mental health issues, substance abuse issues, or both, are the culprits. Medical treatment may be necessary, and, certainly, the support of a spouse can make recovery easier. Even if it is just to prepare mentally for the divorce process, consulting with a professional earlier is a must.

2. Gather Financial Documents – All of your bank accounts, credit card accounts, retirement accounts, investments, etc., will be valued during the divorce process. Depending on when you acquired them and what you did with them, they may remain yours. But, even if they do, you must still identify them. So start now. These records have a funny way of “disappearing” when one spouse files for divorce, so extra copies are a good idea. Copy, at a minimum: your last five years’ tax returns; your last year’s worth of bank and credit card accounts, investment statements, retirement statements, and so forth. If you can save these to a flash drive for your attorney to download, all the better.

3. Make Your Budget – Whether you have children to support or just yourself, you should plan for emergency and extra expenses now. These include filing fees, attorney fees, housing expenses (more on that next), health insurance you may have to purchase, etc. Build in an emergency fund, if possible, for vehicle repairs, last-minute health expenses, and so forth, but do not make it too large – the larger the reserve, the more you have available to pay as alimony. You, and your attorney, will want to know how much you have to work with so that you select the most appropriate long-term option.

more to follow...

YOUR END OF THE YEAR “TO DO” LIST

Although the holidays are approaching, Christmastime and New Year’s time is not the time to stop working on your case. In fact, the end of the year is the crucial time to complete certain, essential tasks. Here’s why:

1. Alimony – Under most alimony orders, for tax purposes the payments you make   are deductible from income and the payments you receive  are includable in your income. Generally, furthermore, the alimony payments must be from the date of your final order until December 31st of the tax year, i.e., New Year’s Eve.  Except for certain state-payment schemes, the government does not monitor these payments – which means you are responsible for monitoring and, if audited, providing documentation for them.  Take this time at the end of the year to gather your payment records, such as receipts and bank statements, to reflect them when tax filing time comes around. That, too, will be here sooner than you know it.

2.Retirement Accounts – If you have a retirement account, at this time of year your plan should provide you with a year-end summary of your account and the plan, your fourth quarterly statement and, if your plan allows, options for changing your investments, contribution level or both. Keep these documents, as you will likely need to provide them to your soon-to-be-ex, her attorney and your attorney. Also, review your balance and determine whether any of it is pre-marital, meaning accrued before the date of your marriage, or due to passive appreciation, meaning you did not actively trade or invest tomake that pre-marital amount grow.  Finally, consider whether it is appropriate to change your contribution levels – but be careful! If you have an order in place restraining your accounts don’t do it. If you intend to stop or lower contributions to avoid sharing them with your soon-to-be-ex, don’t do it (most judges determine that conduct to be fraudulent in anticipation of litigation). However, if you are looking to free up cash to pay down marital debts, or the cost of litigation, and you and your soon-to-be-ex can generally agree to same, then consult with your financial advisor and your attorney.

3. Records Keeping – Now is the time you will receive year-end statements for bank and credit card accounts, mortgage accounts, retirement accounts, etc. Keep these handy, as you will need to produce them during your case. You should also contact customer service on each statement and request statements from the date of inception of the account or the date of your marriage, whichever occurred first, as you will likely also need to produce these to show which amount is marital and which pre-marital separate property.

Waiting to complete these tasks can be costly. You and your attorney will have to send subpoenas for account statements you could have duplicated when you received them, track down paperwork in a filing cabinet because you cannot locate them, or talk to your spouse’s attorney about who needs what and will get what when – most, if not all, of which is on your  time and dime. 

Take some time to do these tasks now, and you will have more time to enjoy the holidays.

TOP THINGS TO DO IMMEDIATELY AFTER DIVORCE

Change Beneficiaries & Review Estate Plan

            Be sure to change the beneficiary and alternate payee designations on   any life insurance policies, disability policies, bank and credit union accounts, and  any other policy or account, except as required in your Judgment. The Judgment does not automatically change these designations, even for ex-spouses. You should also consider preparing or revising your estate plan. The Judgment does automatically terminate your ex-wife’s right to a share of your estate if you predecease her, and vice-versa, but you will want to update your plan to provide for your daughters and any other children, family members or friends, or other individuals or charities. Your estate plan will dispose of your property at your death, and it may also appoint a guardian for any minor children you have in the event the mother predeceases you or is unable or unwilling to serve as a fit parent. You can designate funds for college savings, and you can transfer assets to minimize tax consequences for beneficiaries, as examples.

FOC Services

            Please take some time to review the Friend of the Court services available to you should you need them in the future. These services are available until each child is age eighteen (or up to nineteen and a half while in high school), you and your ex-spouse opt out of the services, orthe Court orders otherwise. They include parenting time enforcement, family counseling,  child support recommendations applying the Michigan Child Support Formula, which either parent may request once every three years and sooner upon establishing   an appropriate basis to modify the current order, and a robust set of forms to help you enforce or modify orders. You may also obtain these online at www.courts.michigan.gov.

Personal Property

            Make arrangements with your ex-spouse to transfer ownership of property specifically awarded to each of you, and be sure to sign over any titles or    other ownership documents. This includes vehicles -transfer title ownership to the vehicles awarded to each of you. You can transfer title by signing the front of the title and filing with the Secretary of State within fifteen days of singing. The two of you may also go to the Secretary of State together. There are local branches that stay open late on Wednesday and on Saturday. You can locate branches online at www.michigan.gov/sos.

Monitor Credit

            Monitor your credit report to ensure your ex-spouse removes your name and/or pays debts that are in your name but assigned to her.

Tax & Financial Advice

            See a tax professional and a financial advisor to determine the best post-divorce investments and tax filing strategies for you. Most people take a financial hit in divorce, but appropriate planning will help you recover faster.

ARE YOU TERRIFED OF YOUR SPOUSE’S ATTORNEY?: Tips for Successful Trial Testimony

Are you terrified of your spouse’s attorney?

Well, maybe “terrified” is too strong a descriptor – or, rather, too strong to admit feeling. But, if you are, whether or not you admit it, the feeling is normal – particularly if trial is on the horizon. Perhaps you had a bad experience during your deposition, when the attorney (who you refuse to call by name, using simply “him” or “her” ever since) quizzed you about your bank accounts. Perhaps you get annoyed reading “his” or “her” letters to your attorney, a diatribe about all of the things you allegedly did wrong during parenting time.  Perhaps you hate the way crowds part as “he” or “she” storms into the courtroom, an old leather briefcase in one hand and a pen in the other,  looking for your spouse so the two of them can sit together and jot down all of the nasty questions they plan to ask you.

Or perhaps you’ve never spoken to her attorney, but you’ve heard, mostly from her, how much he will “get you” and how “tough” he is.

Or perhaps you’ve never testified, but you’ve had nightmares about a cross examination that goes something like the bullying between Jack Nicholson and Tom Cruise in A Few Good Men. 
The phrases “I want the truth!” and “You can’t handle the truth!” haunt you.

Take it from a trial attorney, sometimes we do look for those Nicholson-Cruise moments, the kind that get our opponent frazzled and force the lies she’s been weaving in three hours’ testimony to unravel and reveal the truth – my guy really isn’t as bad as she says.

But, we can tell when a witness is prepared. Those are the toughest witnesses to crack, and, most of the time, they do not crack. They are calm, cool and collected. They know their facts. They can look us and the judge face-to-face, speak eloquently and sincerely about their family, their children, and so forth. And they can be, and usually are, more persuasive than the attorneys representing them.

Here are the things you should do to be one of these tough witnesses, too:

One Month Before Trial

Get your game plan together with your attorney.

Schedule a meeting for at least one hour (really, at least) to establish goals for your trial, to outline who will testify when, to identify witnesses who will attend voluntarily and which your attorney must subpoena, and to determine which exhibits you have, which your attorney will obtain and which you will provide. Many clients keep a trial notebook that is divided into categories for property, parenting time, employment, and miscellaneous records, and so forth, and includes a notepad for communicating with the attorney during trial. You should gather all of your information in one place so that you and your attorney can refer to records on-the-spot.

If you have not already done so, visit the courtroom where you will testify. If your judge holds public hearings (and most do), try to attend a hearing so that you can see the judge in action and get a feel for his or her tone of voice, courtroom procedures and treatment of attorneys, parties and witnesses. Get acclimated to the environment so that the fact of being in a courtroom is not jarring the day of trial. For attorneys, a courtroom is a second home. It is a familiar place to us. But, for most people, a courtroom is like a hospital waiting room – no one wants to be there, and everyone wants out. The last thing you need when you are testifying is the distraction of large chandeliers, wooden benches, musty books and/or paintings of old judges on the walls. So visit the courtroom early, and get used to it.

Be sure to budget for trial. Have a frank discussion with your attorney about the time and expense involved, and plan accordingly. Trial can be costly, but it is not quite as intimidating or expense, if done correctly, as most clients assume. For example, you may plan your vacation days from work around trial (what a vacation that will be). As another example, you may bring copies of pertinent records to your attorney’s office, rather than pay an assistant to make copies. You should discuss your budget early and often with your attorney, and no later than one month before trial.

One Week Before Trial

            Rehearse, rehearse, and rehearse.

            Meet with your attorney for a dress rehearsal of your testimony. If you can rehearse outside the comfort of your attorney’s office, do it. You might reserve a room in a shared office space, use another attorney’s office or, better yet, go to the courthouse. Have you attorney ask you typical trial questions for a direct examination and the dreaded cross examination. Now, your attorney cannot tell you what to say, but your attorney should advise you as to the speed, sincerity and relevance of the things you do say. For example, rather than say “I want custody because these kids are half mine” (which is a legitimate feeling), your attorney might suggest that you say “I want custody of my children because they are my children and I have done X, Y and Z with them.” Details matter. And the details come through a dress rehearsal.

            At home, study the way you speak. Practice speaking slowly and keeping eye contact with your listener. Imagine the listener is the judge or attorney. Most people speak quickly and in a slightly higher-pitch when testifying, which suggests worrying, fearfulness or lying. Practice speaking slowly and in your normal tone.

            Often, review your notes to commit pertinent facts to memory. These include dates, names of family members and, for cases involving children, medical histories, education histories and names of friends, teachers, doctors and babysitters. Nothing destroys a witness’s credibility quite like forgetting his child’s pediatrician’s name in a Nicholson-Cruise moment. You should review these facts throughout your case, but no less than one week before trial.

One Day Before Trial

            Rest.

            With the anticipating, the tension, and the constant need to pay attention to the words of every witness, to name a few things, trial is exhausting. Get plenty of sleep. If you can take a day off from work, do it. Review your notebook, and go to bed early. If nerves have the best of you, lighten up on the morning coffee and opt for a drink with less caffeine. If you need to go for an early morning run or to the gym, do it. You should practice staying calm throughout your case, but most of all the day before trial.

The morning of, arrive to the courthouse early, have a seat in the courtroom where you will testify and briefly review your notebook. Most of all BE CONFIDENT! You have spent weeks preparing for this day, and it will show.

So, rather than have your spouse’s attorney “get you” a la A Few Good Men, you’ll show them both who’s boss.

HOW TO PROTECT YOUR CREDIT, AND GET PAID, WHEN YOU CANNOT TRUST YOUR EX TO PAY THAT JOINT DEBT

            Parties should order their credit reports to verify what debts are reported under whose names. Under federal law, parties are entitled to obtain free credit reports. These can be ordered online from https://www.annualcreditreport.com. Note that it is illegal to order someone else’s credit report without authorization. The Fair Credit Reporting Act has serious penalties for the ordering of a report without proper authority. 15 USC 1681b, 1681n. If joint credit cards cannot be paid off and closed, parties should explore the possibility of transferring joint debt to separate credit cards to allocate the liability in accordance with their settlement.

            Of course, economic factors may outweigh the legal risks to a party’s credit rating: the parties need to think about which debts have the best interest rates or payment schedules or which are least likely to be enforced. Often parties simply do not have the funds to establish new households and also to pay off debts.

            Short of paying off a debt, there is no sure way to protect one spouse from exposure if the other spouse fails to pay a joint debt. When possible, attorneys should avoid the problem altogether by assigning responsibility for debts to the person whose name appears on the debt or to the person who has the most to lose if the debt is not paid.

            When one spouse assumes a debt bearing the other spouse’s name, a judgment should require the assuming spouse to attempt to remove the other spouse’s name from the debt. If the assuming spouse has a good credit rating and sufficient income, a third-party creditor will sometimes agree to release the nonassuming spouse from liability or will refinance the debt in the assuming party’s sole name. However, creditors are often reluctant to give up a potential pocket to collect from, and refinancing is often expensive.

            Judgments may include various security devices to ensure that a party actually pays the debts he or she has assumed. These devices include liens on other property awarded to the assuming spouse, life insurance to provide funds in case the assuming party dies, an award of attorney fees for enforcement, or the right to offset other obligations between the spouses. A party with adequate bargaining power can sometimes demand a conditional wage assignment or power of attorney to sell assets belonging to the debtor spouse, with the wage assignment or power of attorney only to take effect on the other’s default in payment. However, not all of these security devices will survive a bankruptcy proceeding.

            Under federal law, a spouse whose credit rating is affected by the other spouse’s nonpayment of debts may insert an explanation in his or her own credit reports explaining that the debt in question should have been paid by the other spouse. 15 USC 1681i. This might mitigate credit problems, but it does not make the innocent spouse whole.

NINE MAJOR MONEY MISTAKES TOO OFTEN MADE IN DIVORCE - Part 3

6. BUT WE GAVE HER THE HOUSE (SECURITY)

            You wife might want the house, and she might be able to afford it, by awarding it to her in your divorce decree does not release your liability to the mortgage company. You and your wife can make any agreement you want; the mortgage company does not care and, if she misses a payment, will pursue you for it. That means calls, collections letters and, possibly, a lawsuit. What are you to do if you have to make the payment for her? Most guys, while fearful that this will happen, do nothing in their decree to protect themselves if it does. Get creative – so long as the decree is not against public policy, the judge will sign it. For example, if she misses                a payment, you withhold alimony (more on that in the next mistake), or you get to assume        the payments and possession of the home, or you can demand the home be listed for sale and    the profits, after repaying you, divided, or you keep them. Better yet, require her to refinance     the mortgage and provide you with proof of her attempts on a regular basis until she does so.     The worse thing to do – and also what many guys do – is require her to “refinance.” This means nothing if you don’t have the enforcement language to back it up.

7. I REFUSE TO PAY ALIMONY

            Alimony is not all that bad – really. Many guys refuse to pay alimony because, they think, writing a check every month for years to an ex (who is an ex for a reason, after all) is tantamount to relieving the divorce every month for year. However, alimony is tax deductible from income to you and taxable as income to your ex-wife. You should think of it as a tax planning measure. If you have a choice of paying $5,000 a year as a “property settlement,” which is not deductible to you, and $5,000 a year as spousal support, which is, go for it. Just be sure the support amount is not modifiable upward; otherwise, your ex could reap the benefit of your pay raises post-divorce.

8. SHE NEEDS SUPPORT NOW, SO I’LL PAY IT

            If you pay child support, you will get the sob story: I haven’t received the check, I need extra money for clothes, etc. It’s tempting to make a direct payment, lest you leave a kid without food to eat and a bed to sleep on. But this is a trap. Make a direct payment, and, in most jurisdictions, you will not receive a credit toward the child support you should have paid unless the paying parent keeps a copy of the payment (no cash, please!) and a receipt and both parents agree the payment was intended to replace that support. In many states, the direct payment is        a gift – no ifs, ands or ors about it. That means, you must pay the same support twice.

9. I DON’T NEED A CPA

            Too many men would rather save costs by figuring our tax consequences on their own, maybe with one of those programs you can buy at the grocery store, or, worse yet, ignoring them altogether. However, a divorce is not just about dividing property, venting over who cheated or lied or whatever else went wrong, and making provisions for child welfare. It is a complex transaction that is rampant with tax consequences. What can I deduct? How can I avoid an assessment for property awarded to me? What happens to investments? What filing status do we use? Who claims the children as dependents? What if we owe taxes? You can make agreements in your divorce decree to answer all of these questions. Spend some time with a CPA, in addition to your attorney, to strategize.

But cheap out, and you will make a major money mistake.

NINE MAJOR MONEY MISTAKES TOO OFTEN MADE IN DIVORCE - Part 2

 3. BUT THIS CAR HAS ALWAYS BEEN MINE

            It’s painful, but most guys’ precious belongings become prime targets in a property dispute. Some guys will buy a toy – an old car to fix-up, a train collection to repair – as a hobby  and diversion during a divorce. The problem is, those toys are property, too. Anything you do that causes the property to appreciate is work you are doing for your spouse, too. The best thing to do is leave all your precious belongings alone – don’t go fixing up that car or collection, because the more valuable it is, the more likely you will have to sell it, give it to your wife or fork over some cash to buy her out of “her share.”

4. I KEEP THE BANK ACCOUNT, SHE GETS THE RETIREMENT

            A bank account and a retirement account may have the same balance on paper, but that does not mean they have the same value. In the pursuit of a quick settlement with liquid assets, and hoping to avoid an expert’s fees, some guys will swap a bank account for a retirement account. The problem is, $50,000 in the bank now is not the same as $50,000 in a retirement account now. For one thing, to the extent you can access the retirement account, usually you must pay penalties and taxes for making a withdrawal. For another, there may be hidden costs, such as a loan in repay-status, tied to that account. On the other hand, a future stream of income is usually more value, the present day value, than cash. It’s worth a meeting with a CPA or other specialist to have those accounts valued.

5. SHE CAN HAVE ALL OF THE HOME CONTENTS

            The household furnishings and holiday decorations may seem insignificant to you, but agreeing to give your wife “all the home contents” or “whatever she wants out of the house” is like writing a blank check – for thousands. Think about it. The computers, televisions, china, entertainment systems, books, etc., all have a value. And that value really adds up. Don’t be afraid to have your home contents appraised so the value is taken into account in your overall property division. Otherwise, the divorce court is likely to assign no or a nominal value to those contents.  Obtain the appraisal before you make the argument to your wife’s attorney or in court, though – most judges, and even some attorneys, will dismiss an argument that all of that stuff has value until they have an appraisal in hand.

TO BE CONTINUED...

NINE MAJOR MONEY MISTAKES TOO OFTEN MADE IN DIVORCE - Part 1

The “simple and cheap divorce” is a myth.

Even simple divorces require work, such as divorce decrees that tie-up all lose ends (effective enforcement language, any one?) and post-divorce property transfer documents (deeds, notifications for COBRA, promissory notes, to name a few) to make those decrees work.        And cheap divorces should include money spent wisely.

I write should because the “cheap divorce” really refers to two divorces -- the cost-effective divorce and the avoided-costs divorce. Unfortunately, in pursuit of the cost-effective divorce, and under the mistaken belief that their wives are paying less and have, therefore, somehow “won the case,” too many men make major mistakes when it comes to their money – the very thing they are trying to avoid.

Make these mistakes, and your “simple and cheap divorce” will cost you a fortune:

1. SHE HAS TO PAY HALF THE DEBT, RIGHT?

            Most jurisdictions apply a rule called “equitable distribution” or “equitable division” to divide assets and debt. The rule sounds an awful lot like “equal” division, and, sometimes, it is. For example, retirement accounts (usually, the husband’s) that accrued during the marriage are divided equally between ex-spouses. However, the same is not true for debt. “Equitable” really means, do what is fair, and, for debt, that usually means the spouse who earns more pays more. Do not go racking up a credit card bill with the assumption that your wife will be responsible for one-half the balance. If she earns less than you, she won’t.

2. THE INHERITANCE IS TO ME, NOT US

            If you received an inheritance, you might think all of it is yours – after all, your name appears in your generous great-aunt-somebody’s will, not your wife’s. Not necessarily.              In general, any property  you acquire between the date of your marriage and the date of your divorce is considered marital property eligible for division (for those of you living in community property jurisdictions, the same rule usually applies). An inheritance might be your separate property, but only if you did not commingle it with marital property or treat it as marital property during your marriage. And that is tough to do. Imagine receiving an inheritance of $20,000 and just leaving it in an account, in your name only, sitting there, and not touching it at any time during your marriage. Most spouses don’t, especially in our economy. If you used that inheritance during the marriage, if you added it to a joint bank account, or even if the divorce court believes your wife needs a share of it, that inheritance is not yours – it’s your wife’s, too. The best thing to do, if you receive an inheritance, is title the property in your name only, deposit the money into an account bearing your name only, and do nothing but leave it alone – until you are safely divorced.

TO BE CONTINUED...

SHOULD WE TAKE A BREAK? DO’S AND DON’TS FOR TRIAL SEPARATIONS

News stories of Arnold Schwarzenegger’s “love child” kicked-off what has become an annual ritual: the confessing of the unfaithful politician. “This has been a time of great personal and professional transition for each of us,” his joint statement with wife Maria Shriver read. Understandable. A thirteen-year-old secret that has been growing up in your household, with your marital children, would cause a great personal and professional transition. It is also good media gossip, like something out of a Hollywood movie (except I doubt Schwarzenegger will be saying “I’ll be back” to this one).

But what has been glossed-over in this media gossip is a more common, less interesting but more problematic, concept -- a trial separation. “At this time, we are living apart while we work on the future of our relationship,” their statement went on to read. Is that a good idea? Sometimes, carefully; but, often, no.

A trial separation is a break, from your spouse, from “it all,” to determine whether you are going through a low point in your marriage or should divorce. At first blush, it sounds like a good idea. No one wants to spend money divorcing needlessly, particularly when money is in short supply to begin with. But, if you are not careful, that separation to help you determine whether to divorce can snowball into the biggest problem in your divorce. Here’s why:

Don’t publicize it – Tell someone you are getting a divorce, and suddenly everyone has something to say. You’ll hear horror stories, preaching, “legal advice” (c/o Google), all kinds of things, most of them inaccurate or exaggerated. And that means people are talking about you and your spouse. Like the game “telephone,” what you say will come back to you contorted, and your spouse will have heard it, too. That often perpetuates a divorce. So, leave your Facebook status alone, skip the public statement and keep to yourselves.

Do tell close family – You should, however, tell close family that you and your spouse are separating. By “close,” I mean the family members you can trust, your confidants. Be up-front about your plans so they are not surprised. Tell them what to say to your kids, of what not to say to them, if anything at all. This is a time to rely on your family for help – financially, morally and otherwise – so keep them informed.

Don’t move out – Move out of your home, and your chances of retaining even equal time with your children or your precious belongings are slim to none. Those news stories about couples living in separate homes and sharing time with the kids are just that – stories. It rarely happens in real life, and it probably does not happen much in Hollywood life, either. To a judge, you look like the parent who gave up and the spouse who evidently did not care much about the baseball card collection to take it with you when you up-and-left. Judges rarely care how helpful you thought you would be by letting your wife stay with the kids or how much you intended to return to retrieve your belongings –your wife, who’s angling to keep the kids and your stuff, will make you out to be nothing more than an abandoner.

Do see the kids if you do – If you have already moved out of the house, or have no other choice, then make a schedule to see your kids and stick to it. Have them spend overnights with you. If you do divorce, then you will have already established a pattern for parenting and shown your ability to provide for your children in a new environment. A parenting pattern and your ability to provide are two key factors a judge will consider when deciding who receives custody.

Don’t maintain the status quo – You might agree to pay the bills for your wife while you rent a one-bedroom apartment (the expenses can’t be that bad, right?), but you are fitting yourself for disaster if one of you files for divorce later. For one thing, if she really needs a job, you give her no incentive to get one. Moreover, by continuing to pay the mortgage, the insurance, the utilities, the grocery bill, etc., you are making her case for alimony. You send the message that you can support her, even if you can’t, and are comfortable doing it, even if you aren’t. the better thing to do is determine, before you separate, who is responsible for what bill, put the bill in that person’s name (if possible), and follow-up to make sure the bill is paid.

Do open a separate bank account – It’s amazing how many guys will move out of the house but keep their pay direct-deposited to their joint account for their wife’s use. This might make sense, if she traditionally paid all the bills, but it’s no good if she’s getting ready to file for divorce.    She has complete control over your money, and she could easily, and probably will, withdraw all of it right before she files – leaving you with a cent or two, or maybe an overdraft fee. While you are separated, open a separate account and put some money there for reserve – you’ll need if things get ugly.

Don’t date just to date – A trial separation is supposed to be a time to discover what you want, but that does not mean you have to test-out different women. Take this time to reflect on your marriage and your goals, and leave the casual dating alone. Otherwise, you could end up with your own “love child” and an unintended reason to get a divorce.

Do be honest about a new relationship – If you have met someone, however, be honest about it. Most States are “no-fault” divorce States, which means a girlfriend (including one you cheated with) makes not one difference. Even when an affair does matter, it matters only slightly or        in cases of egregious sleeping-around that has confused your children and left you penniless. In other words, it is a limited consideration. It is a sad thing, but a true one, that marriages fall apart. That does not make you a bad person. If you have found someone else and believe it is time to move on, you are better off being honest about it than lying the rest of your marriage, to your family, your kids and yourself.

Don’t delay the inevitable – The separation should be a short time to reflect. Believe it or not, many go on for years, both spouses waiting for the other to make the first move. The problem is, neither is happy, and one spouse (probably you) is stuck paying the bills.

Finally, do have a separation agreement – Define the parameters of your trial separation. Who will pay what bills? Are you allowed to date? To pick up the kids from school (you should)? To come home? How long will you wait before making the decision to divorce or reconcile? Will you go to counseling? Will you cancel joint credit cards (you should)?  What is the best way to communicate with your spouse (phone, e-mail, text)?

Although, in some States, your separation agreement before a divorce begins will not replace an agreement to divide your property and debts made during your divorce, it is a good precedent. And it is a lot better than separating for an undefined time waiting for your marriage to work itself out like one of those Hollywood movies.

CREATIVE SOLUTIONS TO COMMON DIVORCE DILEMMAS - Part 3

How Will I Know My Kids Are Safe?

If you have ever lost sleep wondering how to keep your children safe during your ex’s parenting time, you are not alone. This is, hands down, the most common parenting time question. Call it parental instinct, loss of control of plain distrust, parents do not like the reality that they cannot be there every minute of parenting time restoring harmony like a graceful dove -- they look like pesky pigeons instead. Nevertheless, you can negotiate a parenting time plan that includes protective provisions. Consider these provisions, which you can enforce in most states with a contempt motion:

For transportation: Each party should be responsible for providing and paying for transportation during that party’s parenting time. If necessary and due to reasonable work schedule conflicts or unavoidable and reasonable personal schedule conflicts, the party may select another properly licensed adult known to the child to provide transportation. The party must personally give advance notice to the other party when possible, and the party will have a first right of refusal to provide transportation instead.

For parenting time pick-up and drop-off delays: Parenting time must be exercised in a prompt manner. If necessary due to an emergency or a reasonable schedule conflict, a thirty minute delay is allowed. The delayed party must personally give advance notice to the other party when possible.

For communicating with your children during parenting time: Each party must provide the other party with a phone contact where the children and the party can be reached at all times during parenting time. The parties may not abuse phone contact privileges but may call the children at reasonable times.

For parenting time modifications: The parties should be encouraged to make arrangements to exchange parenting time to allow the children to attend special events and activities with extended family members and to cooperate with each other to allow the children to spend such other time with the other party as the children desire. However, where applicable for purposes of calculating child support, only ordered overnights will be considered.

What If My Spouse Will Nit-Pick Every Parenting Time Problem?

Post-divorce parenting time litigation is a nightmare, and an expensive one featuring police reports, successive court motions, photographs and a deluge of he said/she said testimony. Maybe your soon to-be-ex brings a tape recorder and her mother to every parenting time exchange, in her words “Just in case.” (“In case what?” you think, baffled.) Maybe your spouse locks her front door and refuses to let you pick up your children because you are fifteen minutes late. (Thank you, traffic pile up on I-60.) Or maybe your spouse is so bent on following every word in your order, verbatim, that she has multiple copies highlighted and tabbed and can recite provisions from heart.

Whatever the reason, if you fear you will litigate parenting time problems unnecessarily post-divorce, consider negotiating an informal dispute resolution agreement. The limits to your creativity depend on the laws in your state. For example, in Michigan, families can agree to attend family law mediation, but not if either party alleges or there has been a history of domestic violence between the parties or either party and the children. Contact your attorney or your court clerk to learn what informal dispute resolutions services are available to you.

Then, include them in a provision like this: The parties are encouraged to use the informal enforcement, mediation and counseling resources at X [name your place] to resolve any problems with parenting time before filing a motion for contempt, a motion to show cause or other formal motion, unless warranted by the circumstances and laws at the time, with this Court. Either party may cite this provision to compel the other party to use these resources in the event the party files a motion with this Court first.

Remember, divorce courts do enforce property settlement agreements even if they would not have crafted them at trial, and divorce courts routinely allow unique parenting time plans if the parents agree the plans are in their children’s best interests. See, e.g. Hamilton v Hamilton,647 So 2d 756; 1994 Ala Civ App LEXIS 441 (1994). Therefore, get creative with your settlement options.

Your alternative? Becoming a Bill in a costly battle for cat custody.

CREATIVE SOLUTIONS TO COMMON DIVORCE DILEMMAS - Part 2

What Do We Do With The Timeshare or Vacation Week?

That timeshare or vacation week you bought as newlyweds for Spring Break has broken your settlement negotiations, huh?  If you can sell and make a profit, do it. You will spend more money in attorney fees arguing who gets to go on vacation when than the vacation is worth. More often, however, parties cannot sell. What can you do?

If you have children, build the timeshare or vacation week into a parenting time schedule. Each parent will take the children on vacation on a rotating schedule. For example, if you have one week in the summer, Mom will take the children on even years and Dad on odd years.

If you do not have children, again, consider awarding the timeshare or vacation week to one party and moving forward. This may include awarding the other party an offset from other marital property, so be sure to value it appropriately. Your financial expert is your best friend here – you might even enter a stipulation with your spouse to retain one expert who will produce a binding value. That way, you save time and attorney fees arguing over competing values.

Or, you might flip a coin. I had a client do that. She lost – but she did take considerable joy in seeing the judge add a coin flip provision to her divorce decree, to her ex-husband’s resentment and rolling eyes.

CREATIVE SOLUTIONS TO COMMON DIVORCE DILEMMAS - PART 1

I met Bill early in my career. He was my first quirky client. I had heard about clients like him in law school, the kind who fret over the small stuff, who never stick to one decision (do you want the red plates or the blue ones?), who call in the morning sobbing and in the afternoon, for no apparent reason, elated, who show up unannounced at 5:30pm on a Friday with a trunk full of paperwork to review rightaway because life depends on it. I thought, then, these clients were figments of real clients, their faults merely magnified by the passage of time, not real people. But then I met Bill.

Bill’s quirk was custody – for his cats. He and his wife, Stella, were retired. Their children had children of their own. They were homebodies and caregivers both. Their two cats were their replacement children.

Now, Bill and Stella were not your typical cat-crazy couple. No, no; they were much worse. These cats had complete wardrobes for spring, summer, winter and fall. They had velvet bedding. They posed for annual photos; like school pictures Stella arranged them neatly in the living room. They ate supper, and only the best meat. They were, as you might imagine, fat fur balls and wildly selfish. But Bill and Stella loved them. 

The problem was, they loved them too much. Those cats were the hold-up in our settlement.

I never thought I would spend hours negotiating who got which cat when. I did, not because I wanted to but because it took time to convince Bill to think creatively. He was not the creative type. I had to coax him into thinking of alternatives to what came, at least to his mind, naturally – child custody for cats. That was impracticable, silly, and likely unenforceable in his court. What we did come up with, though, was an agreement he saw as benevolent and in his cats’ best interests – they would remain at home with Stella (he was moving out for a retired-man’s bachelor pad in the swanky part of town), but Stella would buy him a new cat of his own. The financial insignificance aside, Bill saw this agreement as an opportunity for him to start anew, new cat child and all.

You may not have a cat custody dilemma like Bill’s in your divorce, but settlement-stalling dilemmas can occur. Here are some creative solutions. How creative can you be?

Who Gets The Pet?

So, your pet has become a member of your family, complete with holiday wardrobe, special treats and all. For pet lovers, what happens to your pet when you divorce may be a significant issue, as it was for Bill. For non-pet lovers, what happens to your pet may still be a significant issue. For example, where the family pets reside may affect which parent will receive primary physical custody of the children. In a Delaware case from 2002, the divorce court awarded primary physical custody to a father whose home environment offered his children greater physical and mental stability – notably, the children had a dog, two cats and fish there. Martin v Martin, 820 A2d 410; 2002 Del Fam Ct LEXIS 7 (2002). What can you do if your pets stall your settlement?

If you have children, award the pets to the party retaining primary physical custody. Undoubtedly, your children have grown attached to their pets. Think how overbearing you will appear in court if you insist that Fluffy and Zuzu stay with you, little Fankie and Susie’s attachment to them aside. Moreover, pets have an amazing capacity to soothe; they will help your children cope with the divorce process, during and after. The same is true for children commuting between parents. If you share physical custody, consider transporting the pets with the children. Make a game of it. The children can pack an overnight bag, bring a journal to write down what Pinky did at Dad’s House, what Pink did at Mom’s House, plan activities with the pets, and so forth. Your options are limited to your creativity.

If you do not have children, consider awarding the pets to one party and moving forward. For Bill, this meant purchasing a new pet.

For another client, this meant setting up a pet trust to ensure his ex would have resources to care for his beloved dog and, if not, he would receive them A pet trust is a legally sanctioned arrangement that provides for the care and maintenance of a pet in the event of the owner’s death or disability. Under traditional trust and estate law, a pet owner could not establish a trust for a pet because trusts benefit people, not property. (Sorry, pet lovers, but pets are property.) However, by 2009, 42 states had adopted laws allowing trusts for pets. A person called the “settlor” contributes property (usually cash) to the trust for the “trustee” to manage and expend for the pet’s benefit. The settlor and the trustee may be the same person, and in most states the trust may continue for the animal’s life or for 21 years, whichever comes first. See, e.g., Uniform Trust Code § 408.

THREE TRICKY LANGUAGE TRAPS TO AVOID

Chances are, at some point in your case you will be responsible for reviewing, and drafting, all or a portion of an order or judgment. Certainly, when  your case settles you and your attorney, if you have one, will share in drafting the settlement documents, some of which your judge will sign, with your ex and her attorney.  In many jurisdictions, judges also require attorneys and parties to prepare judgments and orders based on the judge’s rulings at a hearing or trial, as well.

For parties who are unrepresented, this task poses a serious problem – you are responsible for drafting legal documents with very little, if any, legal knowledge. And although some jurisdiction offer free or low cost assistance via help desks, online tutorials and law students, these pale by comparison to a seasoned attorney who has been drafting documents for years.

This is because we attorneys are crafty in our language. Orders and judgments and contracts that bind lives – yours, you ex’s and your family’s – and are meant to last a lifetime. For this reason, we are very particular about the language we use and what that language means. Although these documents should be drafted to be readable, the language more often than not incorporates meanings that, unless you consulted an attorney, you will probably not realize.

That is, until you are trying to enforce a document that you find means more or less than what you expected. Take these three trick language traps as examples:

1.  “By Mutual Agreement.” Often times, your order or judgment will require cooperation with your ex after your separation. For example, you may have to cooperate to sell your home after your divorce. As another example, you may have to communicate with each other before scheduling extra curricular activities for your children during each other’s parenting time. If you see the phrase “by mutual agreement,” you would, naturally, conclude that you and your ex must work to agree mutually. However, such is not the case. “By mutual agreement” means that you and your ex will not do Y unless, and only if, the two of you agree. One of you may disagree for any reason or no reason at all, good or bad. If you disagree, then you are not doing Y. Period. To require cooperation, such that your judge can conclude one of you is acting in bad faith, the better phrase to use is “by mutual and reasonable agreement.” With this phrase, your ex must have a reasonable excuse for disagreeing, not any at all.

2.  “Incorporated.”  For cases involving confidential settlement agreements, the judge often signs a shorter document (for the public record) that references the agreement (which remains private). If you see the word “incorporate” in that shorter document, then you would, logically, conclude that the document is adopting the confidential settlement agreement and can enforce it even if the same terms to not appear in the shorter public document. You would be correct. But wait! Enforce how? In many jurisdictions, the word “incorporate” means that the confidential agreements remains its own binding and independent contract, a contract that is enforceable under the rules with respect to contracts – complete with longer statutes of limitation, civil lawsuits and penalties for defaults. By comparison, the phrase “incorporated and merged” makes the confidential agreement a part of the judgment, with far fewer remedies for enforcing judgments, such as a shorter statute or limitation, in the event of default.

3. “Reasonable Rights of Parenting Time.” For dads, this is usually the biggest trap of all. “Reasonable rights of parenting time” sounds appealing – you will have reasonable parenting time, and the right rather than the option to that time, with your child. Many dads sign off on documents containing this phrase with the mistaken belief that reasonable time is better than the severely limited – or no – time that they have during their case. Not so fast! In most jurisdictions, the phrase “reasonable rights of parenting time” has a specific definition. In Michigan, for example, it usually means alternate weekends and one afternoon during the week – that is, a whole 52 overnights and 52 afternoons for the entire year. Add in a few holidays, and dad has less than 25% of the year to spend with his child.  If you did not consult a handbook at the courthouse, you would not have known otherwise by just this vague language. So, be sure to write down in your order or judgment the specific parenting time schedule you have in mind.

And, as you can imagine, these are but a few of the tricky language traps attorneys use. When faced with them, then, what should you do? The best course of action is to have an attorney review all of your documents with you and make sure, together, that you understand each and every word.

With or without an attorney, however, take your time, take notes, do your homework, ask questions, and make sure the contract that will bind your life is the one you understand.

SHOULD WE TRY A TEMPORARY SEPARATION?3 RISKS YOU MAY NOT HAVE ANTICIPATED

If you’re thinking about a temporary separation, to see if your marriage is reconcilable, then you’ve probably read our articles about the risks. On the one hand, a temporary separation allows you and your spouse some space to think about what you each truly want out of your marriage. On the other hand, a temporary separation can easily transform into a new, and bad, status quo, one in which you have doubled your living expenses and have removed yourself from your children, if you have them, and/or have set a pattern of supporting your soon-to-be-ex. While they may be helpful for the short run, every day must bring the two of you closer together or further apart –otherwise, the risks of confusing your children, establishing a support pattern and setting expectations that you will be the secondary, or “visiting,” parent take over.

Those are the most obvious risks, but there are less obvious, but just as common, risks, too:

Accumulating Assets – While you are separated, you should assume that any asset you and/or your spouse acquire, except some gifts and entirely segregated inheritances, are marital property to be divided equally between the two of you. This means, the furniture you bought to outfit your new place, your new TV, your contributions to your 401k, your interests in your pension, and so forth, are eligible for division – even after, in most states, a lengthy separation. This rule is not intuitive because most spouses will expect that their property rights were defined at the time they separated, since their decision to divorce is, in their minds, really an extension of their decision to separate. However, in most states, the rule is property is to be divided if it came to be between the date of the marriage and the date of the divorce, NOT the date of separation. While some states allow judges to fix the date at an earlier date, such as the date of separation or some date in between when it became clear the couple would not reconcile, this is but an exception to the rule. What’s worse – if you stop contributions toward your retirement to get around this rule, most states will treat your actions as “in anticipation of divorce” and will divide your retirement as if you had made those contributions. The best approach, therefore, is to make the separation short and decide soon whether to reconcile or file for divorce.

 Unanticipated Debts – Similarly, in most states, the debts either you or your spouse acquire are still considered marital debts to be divided between the two of you as of the date of divorce – again, not as of the date of separation. This may be intuitive for debts like the credit card the two of you have been using for gas, a medical expense for your child, or the home mortgage, but what about anticipated debts like a home repair while your spouse has resided in the home or a vehicle repair that went on a credit card or credit card spending your spouse claims is “all for the family” but you cannot track? Yes, in most states these too would be marital debt. While some states allow judges to fix the date to divide debts as of some other date, and to identify some debts as “purely personal” (after your time and money spent explaining to the judge why), this too is the exception and not the rule. You should assume that any debts your spouse acquires while you are separated from her are one-half yours.

Tax Filing Status – Unfortunately, these unanticipated consequences can, and often do, carry over to tax season. There is no rule that spouses must file their federal tax return with the status “married, filing jointly,” which is, generally, the most preferred tax filing status. Rather, either spouse may file with the status “married, filing separately” and take advantage of his or her own deductions, exemptions and refunds. If you and your spouse are not on speaking terms, you may no discover this separate filing until you file your return – long after he or she has claimed items for the home, and the children, and long after spending your  refund.

Then what are you to do if you and your spouse still intend to separate temporarily? First, establish a firm deadline for the separation – a month, two, etc. – at which time you will either reconcile or one of you will file for divorce. The longer your separation goes, the greater these risks grow. Second, consider a separation agreement. In some states, judges will enforce these as contracts, and in a minority they will not, but, either way, you and your spouse have set forth your expectations. (If you do not believe she will honor them, that is another sign you should file for divorce.)

Most of all, exercise caution every day of your separation – assume your assets during that time are one-half your spouse’s, her debts are one-half yours and taxes will be in-issue, and decide relatively soon to file for divorce if every day you are not growing closer together as a couple.

DESERVED APOLOGY OR DANGEROUS ADMISSION?:THE SECRET COST TO SAYING “I’M SORRY”

Another public personality, shame-faced and sullen, said “I’m sorry” to an angrily silent room, his endorsers and busy cameras this past week. Whether you love him or hate him, believed him or could care less, Tiger Woods broadcast his apology worldwide to his wife, Elin Nordegren, and to you. According to personality and crisis communication experts like W. Timothy Coombs, Ph.D., who recently spoke to Time Magazine about “the apology,” a public apology like his is a good thing because it conveys regret, ownership for the past and a commitment to change future behavior to wife, family, friends and, for you famous wrong-doers, fans. These are “all the key elements of an effective apology,” says Coombs.

Maybe for Tiger Woods.

For you, those words you think are a deserved apology could be a dangerous admission.

The tossed-about phrase with non-lawyers is, “It’s hearsay; it can’t come in.” Wrong. In most jurisdictions, your statements are admissions that the court may admit into evidence against you as substantive evidence (i.e., for the truth of the matter asserted) and to impeach your in-court testimony (i.e., to make you look like a liar).

“Hearsay” is an out-of-court statement or assertive conduct offered into evidence to prove the truth of the matter asserted. Hearsay is inadmissible as substantive evidence unless a hearsay exception applies. Hearsay exceptions include dying declarations, excited utterances, learned treatises, present sense impressions, and tens of others for each jurisdiction. For example, witness John could not testify that “I heard X tell Y that the defendant killed the victim” unless a hearsay exception applied (perhaps X yelled in a fit of excitement). A lawyer in your jurisdiction can explain the exceptions applicable to your case.

Admissions are a party’s out-of-court statements or assertive conduct, and they are non-hearsay if one party offers them against the other party. In other words, defendant husband’s statement is not hearsay if plaintiff wife offers it against him. All jurisdictions characterize these statements as non-hearsay. Therefore, they are not subject to the hearsay rules, and the proponent need not find one of those tens of hearsay exceptions to apply before offering it into evidence. See, e.g., MRE 801(d)(1).

The party may offer the admission into substantive evidence, i.e. to prove the matter asserted. For example, revenge-drive plaintiff wife’s lawyer could admit a tape recording of remorseful defendant husband apologizing for “gambling away our savings” or “taking that trip with my secretary because I didn’t care what you and the kids did at Christmas,” which husband thought wife would appreciate, this sincere apology, to prove that husband gambled the parties to debt or cares more about sex than his children. And all of that to husband’s dismay – all he thought he did was apologize.

There are, as one would expect in the law, always exceptions. For example, admissions are not admissible into substantive evidence if they are made in connection with a criminal case later expunged, plea negotiations, settlement discussions or certain civil infractions. See, e.g., Pizzillo v Pizzillo, 884 SW2d 749 (Tenn Ct App 1994) (memorandum of father’s admissions to child abuse in criminal case could not be admitted into evidence in later divorce case when criminal case record expunged).

More often, however, these out-of-court statements are the common type: e-mails; Facebook messages; YouTube videos; letters; voicemails; confessions at the holiday party. These are ripe for admission into evidence as party-opponent admissions.

Unfortunately, when, like Tiger Woods, spouses face mounting proof and/or wild accusations of an affair, the temptation to speak up is great. What should you say if you want to say, “I’m sorry”? For get the “I’m sorry for sleeping with other women and neglecting you and the children” apology a la Tiger Woods. Try these “friendly” admissions instead:

In Therapy: If your dirty deeds are driving you crazy, talk to a psychologist. In many jurisdictions, your conversations with a psychologist are privileged. The purpose of this privilege is to protect the confidential nature of the relationship between the psychologist and the patient, and only the patient (in our scenario, you) may waive it and permit the psychologist to testify. See, e.g., Jack v Jack, 239 NW2d 231 (Mich Ct App 2000). Not all jurisdictions recognize this privilege, so be sure to discuss your therapy plans with your lawyer first.

In Church: If your moral transgressions are dying for confession, go to church. In most jurisdictions, your conversations with your church leader (whatever the denomination, be he the Pope or the free-wheeling multi-denominational type) are also privileged. The purpose of the clergy-penitent privilege, like the psychologist-patient privilege, is to protect a relationship our society has long treated as confidential (indeed, in this scenario, sacred). So long as you make the confession to the church leader in his or her professional capacity and in accordance with your religion’s discipline, it is protected, and only you may waive it. See, e.g., People v Lipsczinska, 180 NW 617 (Mich 1920). Be sure to discuss your plans, but perhaps not the actual confession, with your lawyer first because not all jurisdictions recognize the privilege for every religion.

In The Child’s Best Interests: If therapy and church just will not do, be sure to keep any confession focused on your children’s best interests. Think about every statement you make and ask yourself, “Would this sound bad in court?” and “How can I make this sound good, yet be sincere?” For example, forget, “I’m sorry I spent the weekend with Shelly and not the kids.” Go with, “I’m sorry I had a momentary lapse in judgment; I am usually so focused on spending the weekend with the kids, as I have repeatedly during our marriage.”

The best practice, however, is to say nothing at all. Lawyers have a crafty way of twisting words, and even the well-intentioned apology could turn into a costly confession in court.

Let the desire for an apology give way to the goal in your case: the best outcome for you and your children. That means forgoing apologies you think are deserved to set yourself on good ground in court, because your spouse’s lawyer will turn them into dangerous admissions.

Remember, you are not Tiger Woods with a public persona and endorsements to salvage – and, if you are, maybe you too should have taken this advice.