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Divorce 101 what to know before you go

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Presentation on theme: "Divorce 101 what to know before you go"— Presentation transcript:

1 Divorce 101 what to know before you go

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 attendance We 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 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

4 Overview of Divorce Process Options

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 divorce Mediation Collaborative Process On 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 members Spouse unwilling to disclose financial information Significant 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. 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

9 Divorce Mediation

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 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

11 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


13 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.

14 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 everyone’s interests. The collaborative process helps parents co-parent effectively after divorce.

15 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.

16 Parenting Parenting 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 family There are no “standards” Many modern couples are creating parenting plans that work best for their family and their children

17 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)

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

19 Child Support Guidelines & Concepts
Minimize the economic impact on children of a family break up Provide for the children’s 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

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 DOR Collection and Enforcement Options Modifications - 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 Outcomes Encourage Marriage, Including 2nd Marriages Financially Separate Divorced Spouses Provides Structure to Settlement Negotiations Encourage Financial Planning Economic Independence

23 From The Alimony Reform Act of 2011
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

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 possible Post-judgment modification on duration if material change in circumstances possible

25 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!

26 The new law recognizes 4 categories of spousal support in Massachusetts
Rehabilitative Reimbursement Transitional General 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 education Can be used with any length marriage 5 Year Limit for alimony length, but may be extended Amount 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 years Periodic payments or lump-sum Not subject to income guidelines Not extendable or subject to a modification by the court.

29 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

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 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.

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 - 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

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

35 Property Division

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 equipment Bank Accounts Real Estate Credit card points, miles Time Shares ...all property is subject to division, including... Retirement Assets Investment Accounts

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

38 Other Topics for Consideration
Health Insurance - can get complicated and impact support Unreimbursed medical expenses Kid’s Higher Education Life Insurance - important to protect support obligations Taxes, including dependency exemptions, filing status, etc.

39 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……!

40 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

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 basis Underwater homes: be careful of tax implications from short sale transactions

43 Post Divorce Financial Follow-Up
Have QDRO’s 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. 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 Plan Etc, etc…

44 Questions? Need more information?
Please call (508) for an appointment.

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