2 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 attendanceWe look forward to your questions but we ask that they be posed in a hypothetical manner.
3 The Challenges of Divorce Few, if any, life events rival the stress and emotional upheaval of divorceNormal to feel like everything is falling apartCombination of legal, financial, and emotional issues to contend with is challengingImportant to know what you want, but sometimes what one spouse wants is to stay married; but you cannot stop a divorce
5 How will you navigate the process How will you navigate the process? Consider what is best for you and your kids and think long-term.Traditional court-based divorceMediationCollaborative ProcessOn Your Own - no help from professionals
6 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
7 Court - Based Divorce May be the best option when... When your spouse will not consider other options.History of domestic violence, or other significant abuse of family membersSpouse unwilling to disclose financial informationSignificant psychological or addiction issues
8 Court or Litigation Based Process starts with filing of a Complaint for Divorce by one party against the other. Plaintiff v. DefendantCourt places case on a fourteen (14) month scheduling track, but case could take longer or shorterMany cases will have Motions for Temporary OrdersGive up control and decision making to third partiesAdversarial process, makes it hard to “move on” post- divorce and parent with former spousePublic process-anyone over the age of eighteen (18) is allowed in the court room
10 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 issuesAttorney who is a mediator is not the “attorney” for both parties or either partyMediator Hat vs. Attorney (advocate) HatNo decisions can be imposed upon you, parties maintain more controlCouple can control the paceGenerally faster and less expensive
11 Mediation...continuedMediators 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 documentsMediation is not just for couples that already agree on everything! We have mediated many complicated agreementsSome couples who have already started the court based litigation process can choose mediation to help them resolve their case
13 Collaborative Divorce Like mediation, the collaborative process (CP) is an alternative to litigationTeam-based, non-adversarial approachEach client retains a collaboratively-trained lawyer to represent themA neutral divorce coach (mental health professional) is part of the team and attends all meetingsCollaborative 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.
14 Resolving Disputes Respectfully through the Collaborative Process Series of meetings is held to reach a mutually acceptable settlement on all issuesMaintain open communications and information sharingNo threats of courtIf process completely breaks down, parties must get new attorneys for court. This aligns everyone’s interests.The collaborative process helps parents co-parent effectively after divorce.
15 Divorce & ChildrenMost important predictor of a successful outcome for children are lower levels of conflict during the divorce and a positive post-divorce familyTwo active, involved parents enable children to thrive - during and after divorce!Pitfalls: Disparaging the other parent, projecting your own feelings onto the kidsThink about how and when to tell your children, what to tell them, and what questions to expect.
16 ParentingParenting Plan is slowly replacing the terms custody and visitation.Two types of custody in MA-Legal custody and Physical custody.Don’t assume what you see on TV or hear from friends is best for your familyThere are no “standards” Many modern couples are creating parenting plans that work best for their family and their children
17 Parenting PlansParenting plan should be flexible, but have enough detail to be helpful and avoid conflictEncourage cooperation, information sharingFocus should be on the best interests of the childrenAll couples must complete a Mandatory Parenting Education Class (sheet in folder)
18 Child Support Child Support Guidelines (2013) When does child support end?What if joint custody?Modifications of Child SupportDepartment of Revenue Services
19 Child Support Guidelines & Concepts Minimize the economic impact on children of a family break upProvide for the children’s basic needsEncourage joint parental responsibility for financial support of child/childrenTo 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
20 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.
21 More on Child Support MA Department of Revenue Many services available from DORCollection and Enforcement OptionsModifications - change in employment, income, parenting schedule, etc.Contempt Actions-what to do if a parent doesn’t pay their support?
22 Main Goals of Alimony Reform: Predictability and Uniformity More Consistent OutcomesEncourage Marriage, Including 2nd MarriagesFinancially Separate Divorced SpousesProvides Structure to Settlement NegotiationsEncourage Financial PlanningEconomic Independence
23 From The Alimony Reform Act of 2011 Alimony DefinitionThe 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
24 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 (Social Security) - currently 66.Court may extend alimony payments for good cause shown. Extension should be requested at time of original order if possiblePost-judgment modification on duration if material change in circumstances possible
25 CohabitationIssue of cohabitation is a question of fact to be determined by the courtFactors: Share a common household, present as a couple, joint memberships, economic interdependenceMinimum amount of time of cohabitation 3 monthsSpousal support may be reduced, suspended, or terminated, but...Reinstatement is also possible!
26 The new law recognizes 4 categories of spousal support in Massachusetts RehabilitativeReimbursementTransitionalGeneral Term
27 Rehabilitative alimony Paid to a spouse who is expected to become self- sufficient at a predicted time with re-employment or additional training or educationCan be used with any length marriage5 Year Limit for alimony length, but may be extendedAmount may be modified
28 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 yearsPeriodic payments or lump-sumNot subject to income guidelinesNot extendable or subject to a modification by the court.
29 transitional alimonyPurpose is to assist the recipient spouse transition to a new “adjusted” lifestyle or location as a result of divorce.Up to a 5 year marriageMaximum alimony order is 3 yearsNot subject to an extension or modification
30 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 recipient’s need or 30-35% of the difference between the parties’ gross incomes established at the time of the order being issued.
31 GTA Time LimitsIf 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.
32 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.
33 Modifications - TimePayors married to the recipient 5 years or less may file for a modification on or after 3/1/13Married 10 years or less, but more than 5 - file for modification on or after 3/1/14Married 15 years or less, but more than 10, file on or after 3/1/15Married 20 years, but more than 15, can file on or after September 1, 2015
34 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
36 Property Division Includes... All property is subject to an Equitable Division including but not limited to….Cars, Boats, etc.Personal Property, such as jewelry, musical instruments, furniture, lawn equipment, sports equipmentBank AccountsReal EstateCredit card points, milesTime Shares...all property is subject to division, including...Retirement AssetsInvestment Accounts
37 Debt One thing nobody wants! Credit Cards Mortgages - is your house upside down?Student LoansMedical Bills...
38 Other Topics for Consideration Health Insurance - can get complicated and impact supportUnreimbursed medical expensesKid’s Higher EducationLife Insurance - important to protect support obligationsTaxes, including dependency exemptions, filing status, etc.
39 Common financial issues in divorce Not Knowing/ Disclosing ALL The Financial AssetsFor many couples, this is the first time the marital assets have been tallied.Are any assets missing?Pension/ defined benefit plansAnnuitiesRetirement accountsStock optionsCash value insurance policiesEtc……!
40 Tax Implications Of Your Settlement Different assets have different tax structures– $100k savings account ≠ $100k IRAAlimony vs. Child SupportIs 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
41 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?”
42 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 basisUnderwater homes: be careful of tax implications from short sale transactions
43 Post Divorce Financial Follow-Up Have QDRO’s completed to divide employer retirement accountsConfirm retirement plans will allow QDRO BEFORE divorce is finalHealth insurance follow upIf extending coverage through COBRA, alternate payee must contact employer of the divorce within a certain time frame.Personal finances can be complicated. Divorce can make them more complicated. Have a CDFA financial professional as part of your divorce team.Beneficiary changes on retirement accounts, annuities, insurance policies, etc.Update Estate PlanEtc, etc…
44 Questions? Need more information? www.divorcecollaborative.com Please call (508)for an appointment.