Divorce 101 what to know before you go

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Divorce 101what to know before you go
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• Thank you for coming to the seminar
• Unfortunately, we cannot answer questions about
  your particular situation. Our goal is to provide
  you with a general overview and some useful
  information. We will not give you specific legal
  advice tonight.
• By attending the seminar, we are not establishing
  any attorney-client relationship with you as a
  result of your attendance
• We look forward to your questions but we ask that
  they be posed in a hypothetical manner.

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The Challenges of Divorce

• Few, if any, life events rival the stress and
  emotional upheaval of divorce
• Normal to feel like everything is falling apart
• Combination of legal, financial, and emotional
  issues to contend with is challenging
• Important to know what you want, but sometimes
  what one spouse wants is to stay married but you
  cannot stop a divorce

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Overview of Divorce Process Options
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How will you navigate the process?Consider
what is best for you and your kids and think
long-term.

• Traditional court-based divorce
• Mediation
• Collaborative Process
• On Your Own - no help from professionals

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Court-Based Divorce

• Also known as a contested divorce or litigation
• Important! Less than 10 of divorce cases result
  in a trial. The vast majority settle, when the
  parties agree, at some point in the process.
• Usually slowest and most expensive alternative

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Court - Based DivorceMay be the best option
when...

• When your spouse will not consider other options.
• History of domestic violence, or other
  significant abuse of family members
• Spouse unwilling to disclose financial
  information
• Significant psychological or addiction issues

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Court or Litigation Based

• Process starts with filing of a Complaint for
  Divorce by one party against the other.
  Plaintiff v. Defendant
• Court places case on a fourteen (14) month
  scheduling track, but case could take longer or
  shorter
• Many cases will have Motions for Temporary Orders
• Give up control and decision making to third
  parties
• Adversarial process, makes it hard to move on
  post-divorce and parent with former spouse
• Public process-anyone over the age of eighteen
  (18) is allowed in the court room

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Divorce Mediation
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Mediation Facts

• Voluntary, confidential process
• Mediator serves as a neutral third-party, in an
  effort to facilitate a lasting agreement between
  the parties on all issues
• Attorney who is a mediator is not the attorney
  for both parties or either party
• Mediator Hat vs. Attorney (advocate) Hat
• No decisions can be imposed upon you, parties
  maintain more control
• Couple can control the pace
• Generally faster and less expensive

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Mediation...continued

• Mediators who are also attorneys can draft your
  divorce agreement or any court paperwork at the
  end of the process (non-lawyers cannot draft
  legal documents)
• Option of having an attorney on the outside
  during the mediation process to advise you and
  review documents
• Mediation is not just for couples that already
  agree on everything! We have mediated many
  complicated agreements
• Some couples who have already started the court
  based litigation process can choose mediation to
  help them resolve their case

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Collaborative Divorce

• Like mediation, the collaborative process (CP) is
  an alternative to litigation
• Team-based, non-adversarial approach
• Each client retains a collaboratively-trained
  lawyer to represent them
• A neutral divorce coach (mental health
  professional) is part of the team and attends all
  meetings
• Collaborative Law encourages the use of other
  experts if needed, such as a financial or tax
  professional. The cost of experts is normally
  shared between the parties.

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Resolving Disputes Respectfully through the
Collaborative Process

• Series of meetings is held to reach a mutually
  acceptable settlement on all issues
• Maintain open communications and information
  sharing
• No threats of court
• If process completely breaks down, parties must
  get new attorneys for court. This aligns
  everyones interests.

The collaborative process helps parents co-parent
effectively after divorce.
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Divorce Children

• Most important predictor of a successful outcome
  for children are lower levels of conflict during
  the divorce and a positive post-divorce family
• Two active, involved parents enable children to
  thrive - during and after divorce!
• Pitfalls Disparaging the other parent,
  projecting your own feelings onto the kids
• Think about how and when to tell your children,
  what to tell them, and what questions to expect.

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Parenting

• Parenting Plan is slowly replacing the terms
  custody and visitation.
• Two types of custody in MA-Legal custody and
  Physical custody.
• Dont assume what you see on TV or hear from
  friends is best for your family
• There are no standards Many modern couples are
  creating parenting plans that work best for their
  family and their children

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Parenting Plans

• Parenting plan should be flexible, but have
  enough detail to be helpful and avoid conflict
• Encourage cooperation, information sharing
• Focus should be on the best interests of the
  children
• All couples must complete a Mandatory Parenting
  Education Class (sheet in folder)

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Child Support

• Child Support Guidelines (2013)
• When does child support end?
• What if joint custody?
• Modifications of Child Support
• Department of Revenue Services

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Child Support Guidelines Concepts

• Minimize the economic impact on children of a
  family break up
• Provide for the childrens basic needs
• Encourage joint parental responsibility for
  financial support of child/children
• To the extent either parent enjoys a higher
  standard of living - to allow child to benefit
  from that higher standard-the more money parents
  make, the more they spend on their children

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• Child Support (CS) is tax neutral, meaning it is
  not considered income for tax purposes - but may
  be for other things, like financial aid. CS is
  not deductible by the payor.
• Guidelines consider income from all sources, cost
  of health and dental insurance, childcare, and
  previous support obligations.
• Issues not on the face of the child support
  guidelines, such as
• Attribution of Income, Deviations based upon
  specific findings, identifying ALL income, etc.

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More on Child Support

• MA Department of Revenue
• Many services available from DOR
• Collection and Enforcement Options
• Modifications - change in employment, income,
  parenting schedule, etc.
• Contempt Actions-what to do if a parent doesnt
  pay their support?

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Main Goals of Alimony Reform Predictability and
Uniformity

• More Consistent Outcomes
• Encourage Marriage, Including 2nd Marriages
• Financially Separate Divorced Spouses
• Provides Structure to Settlement Negotiations
• Encourage Financial Planning
• Economic Independence

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Alimony Definition
The payment of support from a spouse, who has the
ability to pay, to a spouse in need of support
for a reasonable length of time, under a court
order. From The Alimony Reform Act of 2011
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• Presumption that alimony ends at retirement is an
  important component of the new statute
• Retirement age based upon the full retirement age
  under 42 U.S.C. 416 (Social Security) - currently
  66.
• Court may extend alimony payments for good cause
  shown. Extension should be requested at time of
  original order if possible
• Post-judgment modification on duration if
  material change in circumstances possible

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Cohabitation

• Issue of cohabitation is a question of fact to be
  determined by the court
• Factors Share a common household, present as a
  couple, joint memberships, economic
  interdependence
• Minimum amount of time of cohabitation 3 months
• Spousal support may be reduced, suspended, or
  terminated, but...
• Reinstatement is also possible!

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The new law recognizes 4 categories of spousal
support in Massachusetts

1. Rehabilitative
2. Reimbursement
3. Transitional
4. General Term

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Rehabilitative alimony

• Paid to a spouse who is expected to become
  self-sufficient at a predicted time with
  re-employment or additional training or education
• Can be used with any length marriage
• 5 Year Limit for alimony length, but may be
  extended
• Amount may be modified

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reimbursement alimony

• Designed to compensate the recipient spouse for
  economic or non-economic contribution to the
  financial resources of the payor spouse, such as
  enabling the payor spouse to complete and
  education or job training.
• Appropriate for marriages lasting up to 5 years
• Periodic payments or lump-sum
• Not subject to income guidelines
• Not extendable or subject to a modification by
  the court.

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transitional alimony

• Purpose is to assist the recipient spouse
  transition to a new adjusted lifestyle or
  location as a result of divorce.
• Up to a 5 year marriage
• Maximum alimony order is 3 years
• Not subject to an extension or modification

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General Term Alimony...

• Periodic payment of support to a spouse who is
  economically dependent.
• Related issues that were troublesome in the past
  are now addressed...well, mostly.
• Amount of GTA should not exceed the recipients
  need or 30-35 of the difference between the
  parties gross incomes established at the time of
  the order being issued.

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GTA Time Limits

• If the marriage length is 5 years or less, GTA
  shall continue for not longer than one-half the
  number of months of the marriage.
• If the marriage lasted 10 years or less, but more
  than 5 years, then GTA shall continue for not
  longer than 60 of the number of months of the
  marriage.
• For a marriage lasting 15 years or less, but more
  than 10 years, then GTA shall continue for not
  longer than 70 of the number of months of the
  marriage.

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Durational Limits - continued

• If the marriage was 20 years or less, but more
  than 15 years, then GTA shall continue for not
  longer than 80 of the number of months of the
  marriage.
• For marriages lasting longer than 20 years, the
  court may order indefinite support, but
  retirement presumption is now part of the new
  law.
• The court has discretion to increase the length
  past retirement.

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Modifications - Time

• Payors married to the recipient 5 years or less
  may file for a modification on or after 3/1/13
• Married 10 years or less, but more than 5 - file
  for modification on or after 3/1/14
• Married 15 years or less, but more than 10, file
  on or after 3/1/15
• Married 20 years, but more than 15, can file on
  or after September 1, 2015

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Modifications - Retirement

• Any payor who has reached full retirement age
• Or who will reach full retirement age on or
  before March 1, 2015
• May file a modification or or after March 1, 2013

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Property Division
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Property Division Includes...

• All property is subject to an Equitable Division
  including but not limited to.
• Bank Accounts
• Real Estate
• Time Shares
• Retirement Assets
• Investment Accounts
• Cars, Boats, etc.
• Personal Property, such as jewelry, musical
  instruments, furniture, lawn equipment, sports
  equipment
• Credit card points, miles
• ...all property is subject to division,
  including...

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Debt

• One thing nobody wants!
• Credit Cards
• Mortgages - is your house upside down?
• Student Loans
• Medical Bills...

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Other Topics for Consideration

• Health Insurance - can get complicated and impact
  support
• Unreimbursed medical expenses
• Kids Higher Education
• Life Insurance - important to protect support
  obligations
• Taxes, including dependency exemptions, filing
  status, etc.

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Common financial issues in divorce

• Not Knowing/ Disclosing ALL The Financial Assets
• For many couples, this is the first time the
  marital assets have been tallied.

• Are any assets missing?
• Pension/ defined benefit plans
• Annuities
• Retirement accounts
• Stock options
• Cash value insurance policies
• Etc!

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• Tax Implications Of Your Settlement

• Different assets have different tax structures
• 100k savings account ? 100k IRA

• Alimony vs. Child Support
• Is there a combination that works best to
  minimize post divorce taxes owed by each spouse?
• Post divorce house sale could trigger a capital
  gain tax

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How Will Divorce Impact Your Financial Status?

• What will your post divorce income be?
• What will your post divorce expenses be?
• How will health care insurance be handled?
• What changes will you need to make to balance
  your post divorce budget?
• Will I be OK?

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The House

• Sell or Keep?
• Decision requires significant analysis
• Can the spouse who keeps the house afford it?
• Mortgage refinance?

• If home will be sold in the future, understand
  tax basis
• Underwater homes be careful of tax implications
  from short sale transactions

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Post Divorce Financial Follow-Up

• Have QDROs completed to divide employer
  retirement accounts
• Confirm retirement plans will allow QDRO BEFORE
  divorce is final
• Health insurance follow up
• If extending coverage through COBRA, alternate
  payee must contact employer of the divorce within
  a certain time frame.

• Beneficiary changes on retirement accounts,
  annuities, insurance policies, etc.
• Update Estate Plan
• Etc, etc

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Questions?
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