#divorceandmoney

[syriaccpa]

Getting divorced? All assets are not created equal.

[syriaccpataxaccounting]

Getting divorced? All assets are not created equal.

[amarallaw]

Sound Reasons Why You Should Mediate Your Divorce.

. I have been a divorce attorney for over 25 years and a divorce mediator for almost as long. When a potential client asks me whether they should mediate their divorce or whether they should just get their own attorney and file for a contested divorce, I tell them the following. A contested divorce can last well over a year.  In fact, in Massachusetts, the tracking order assigned to your contested divorce is for fourteen (14) months. Which means that the life span of a contested divorce can be as much as 14 months. During this time frame, the parties will exchange financial documents, attend numerous hearings on temporary orders in court, have a pre-trial hearing followed up by status conferences and then a trial if your case does not settle. All of this discovery and all of the court hearings and meetings or phone call with your attorney will cost you money in legal fees both to you and your spouse. A divorce attorney can make 10-20 times more in legal fees on a contested case then they can on a mediated case. Legal retainers range from $ 5,000 to $ 20,000, per spouse, for an initial retainer, depending on what is in dispute and the nature of your assets.  Whereas, divorce mediation can cost each spouse as little as a $ 1,000 per spouse plus the filing fee which is $ 215 here in Massachusetts. At Amaral & Associates, P.C., for example, we have program called FIT Divorce Mediation at www.amarallaw.com .  FIT stands for fast, inexpensive and thorough. The cost per spouse is $ 999.00 plus the filing fee. This flat fee includes three (3) hours of face time with your mediator which is all that is usually needed. In addition, this fee includes the preparation of your divorce agreement, the divorce filing and the preparation of your respective financial statements. We will then file the agreement with the court for you and a divorce hearing date will be assigned to you in usually six (6) to (8) weeks. Then you and your spouse will appear together for a brief five (5) minute hearing before a judge. It’s that easy and a lot faster than 14 months and a hell of lot less expensive. Moreover, the agreement is just as thorough as though you went through a contested divorce. Each divorce agreement consists of the number of years that your mediator has been practicing and after each year, the agreements get refined. The same agreements are used on contested case for all issues, including, but not limited to, alimony, custody, child support, division of real and personal property, parenting plans, medical and life insurance, education, taxes and exemption issues and payment of debt. The mediation process is also very amicable. This is important if you would like to preserve what is still left in your relationship with your spouse. In addition, it is less burdensome on your children. Because when you get divorced from each other, you are not divorcing your family, only your spouse. The father is still the father, the mother is still the mother, the children are still your children, and the family is still your family. For more information on divorce mediation, give us a call at (617) 539-1010 or email me at edamaral@amarallaw.com . Read the full article

[yourcreditrexpert]

11 Women Share the Costly Money Mistakes They Made During Divorce We talked to women who've gone through or are going through the divorce process to see what the financial aspect has been like for them and what lessons they've learned along the way. #divorceandmoney

[amarallaw]

Do I Have To Give My Spouse Part Of My Business In Our Divorce?

When spouses are going through a divorce, one thing that always must be addressed is property division.  However, when one or both spouses own a business, or even have an interest in a business, property division can be much more complicated.  A common question spouses ask is: Do I have to give my spouse part of my business in our divorce?  In Massachusetts, the short answer is No, but the answer isn’t that simple.   Under the property division statute in Massachusetts, Massachusetts General Laws chapter 208, section 34, the Probate and Family Court must consider the following factors in dividing the marital estate:   length of the marriage, the conduct of the parties during the marriage, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties, the opportunity of each for future acquisition of capital assets and income, and the amount and duration of alimony, if any, awarded under sections 48 to 55, inclusive. In fixing the nature and value of the property to be so assigned, the court shall also consider the present and future needs of the dependent children of the marriage. The court may also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates and the contribution of each of the parties as a homemaker to the family unit     Also, the appellate courts have routinely stated that property division includes any assets of each spouse, regardless of whether the assets are titled in only one spouse’s name, in both spouse’s name, or in one spouse’s name jointly with another individual.  This typically means that a business interest, even if it is only in one spouse’s name, is a marital asset that will be divided one way or another.   However, the next step is to determine how much that business (or the spouse’s business interest) is worth.  That almost always requires a business appraisal by a financial expert qualified to conduct business appraisals for a divorce.  Many spouses think that this is something their own CPA can do, but oftentimes CPA’s will not qualify as an expert for business appraisal purposes in the eyes of the Probate and Family Court.  Thus, the spouses must either each hire a business appraiser to conduct an appraisal of the business, or the spouses can agree to hire one business appraiser to conduct a joint appraiser.   Once the business appraiser conducts his analysis, he will give the spouses and their attorneys two numbers: 1) the value of the business (or spouse’s business interest); and 2) what is a “reasonable compensation” for that business owner spouse for purposes of calculating child support and/or alimony.  With these two numbers in hand, spouses and their attorneys then have to figure how what, if anything, is the non-business owner spouse entitled to from the value of the business.   This does not mean that the non-business owner spouse will actually obtain an ownership interest in the business.  Rather, the business owner spouse will then have to pay the non-business owner spouse a certain dollar amount for property division based upon the value of the business.  Depending on how much is left in the marital estate (above and beyond the value of the business) this can sometimes be done with a trade off of assets where the non-business owner spouse receives a greater share of the other assets.  However, when there are not enough assets for a trade off, then the business owner spouse typically is given time to essentially “buy out” the non-business owner spouse from the value of the business.  This is typically done in a weekly or monthly installment payments over period of time.  These payments are not considered alimony, but rather property division payments.   The amount the non-business owner spouse receives from the business depends on the factors outlined in Massachusetts General Laws chapter 208, section 34.  The non-business owner spouse is not automatically entitled to 50% of the value of the business.  Depending on the statutory factors, the non-business owner spouse may receive less than 50% of the value of the business.   Thus, in Massachusetts, a business owner spouse does not have to actually give the non-business owner spouse a portion of the business, but the non-business owner spouse will likely be entitled to a monetary compensation based upon the value of the business.     Read the full article

[amarallaw]

Does My Spouse Have an Interest in My Business When We Divorce?

In a divorce, money can be one of the biggest issues spouses fight over.  However, when one (or both) spouses own a business, this can be an even more complicated (and sometimes uglier) fight.  A common question business owners ask when they are going through a divorce is whether their spouse has an interest in the business.  The short answer is yes, but it’s not as straightforward as you think.   Under Massachusetts law, all assets owned by spouses, regardless of whether or not they are joint assets, are marital assets.  This can include a family owned business, even if only one spouse has an interest in that business.  That means the business is a marital asset that is subject to division in equitable distribution.  However, that doesn’t necessarily mean the non-business owner spouse will end up owning the business or having a financial stake in the business through the divorce.  Massachusetts General Laws chapter 208, section 34 outlines factors the Probate and Family Court must consider in the division of marital assets.  Those factors are:   Length of marriage.   Conduct of the respective parties during the marriage.   Ages of the respective parties.   Health of the respective parties.   Station of the respective parties.   Occupations of the respective parties.   Amount and sources of income of the respective parties.   Vocational skills of the respective parties.   Employability of the respective parties.   Estates of the respective parties.   Liabilities of the respective parties.   Needs of the respective parties.   Current needs of the minor children of the marriage.   Future needs of the minor children of the marriage.   Opportunities available to the respective parties for future acquisition of capital.   Opportunities available to the respective parties for future acquisition of income.   Contributions of the respective parties in the acquisition, preservation or appreciation in value of their estates.   Contributions of Husband and Wife as homemaker.   These factors must be considered as a whole.  However, one factor that often is given a little more weight on this issue is the “Contributions of the respective parties in the acquisition, preservation or appreciation in value of their estates.”  Here, the court looks at what the non-business owner spouse contributed toward the business.  Did they help out at the business with any work such as bookkeeping or administrative support?  Did they help with any business dinners or important business meetings and events?  What a spouse contributed towards the business can be an important factor.   However, another important factor is “Contributions of Husband and Wife as homemaker.”  Did the non-business owner spouse take care of the children and the household so the business owner spouse could have more time to manage the business?  If the non-business owners spouse did help in this capacity, this can be another important factor in what, if anything, the non-business owner spouse is entitled to from the business.   The Probate and Family Court will also consider when the business owner spouse acquired an interest in the business.  Was it several years before the couple was married, and the business owner spouse put in their own work before the marriage to make the business profitable? Or was the business acquired only months before the divorce was filed?  These are also important factors.   As if analyzing the Section 34 factors isn’t enough, the Probate and Family Court will also need to know what the business is worth.  This often requires a business appraisal by a financial expert certified to appraise businesses.  These appraisals can be costly, but the return can be potentially significant.  In doing a business appraisal, the expert commonly puts a monetary value on the business owner spouse’s interest in the business, but will also set a salary for which support can be calculated.  This is where things can get confusing.   Although a business owner spouse is drawing an income from that business, it may not be the “correct” income based upon business appraisal standards.  Some common issues that the appraiser must consider are: 1) is the business owner using the business to pay his/her own personal expenses; 2) is the business owner working a normal number of hours; 3) does someone else in the business (oftentimes a relative) have the control to manipulate the spouse’s income.  This all has to be factored into valuing the business and also coming up with the business owner’s appropriate income.   Once this is all considered, then it’s time to decide what, if anything, the non-business owner spouse is entitled to from the business.  Oftentimes, the salary that has been calculated by the business appraiser is used to calculate child support and/or alimony.  After that, once a value is set for the business owner spouse’s interest in the business, the court determines what the non-business owner spouse is entitled to.  If the Court determines that the non-business owner spouse is entitled to share a of the business, this is usually accomplished not by the spouse actually acquiring an ownership interest in the business, but by receiving a payout by the business owner spouse.  Sometimes this is made in the form of one lump-sum payment, and other times it is made in installment payments over time.  Either, way, the non-business owner spouse is monetarily compensated for their share in the business.   Determining a non-business owner spouse’s interest in the other spouse’s business can be complex and confusing. It is important to ensure you have a knowledgeable divorce attorney and a business appraiser to guide you through this process, regardless of which side you are on. Read the full article

[amarallaw]

Financial Planning For and During a Divorce

A divorce brings about many changes in a person’s life.  One of the most significant changes is the financial impact of a divorce.  Spouses go from having a combined household with (usually) two separate incomes, to living apart, and supporting themselves on their own.  If you are contemplating a divorce, or have already filed for divorce, there are different actions you can take to plan for your own financial future after a divorce.   Create a Budget: Review your household expenses to see what your weekly/monthly expenses come out to.  In addition to including the usual expenses (i.e. mortgage/rent, utilities, heat, cable TV, telephone, groceries, clothing, etc.), don’t forget to include other typical expenses, such as uninsured medical expenses, motor vehicle expenses, child care, vacation and entertainment, education costs for yourself and your children. Once you have your budget, look at what your income is, and what it is likely to be at the end of the divorce.  Don’t forget to factor in any alimony and/or child support that you may be paying or receiving. Based upon the budget you create, you can figure out whether you need to make any cuts in the budget, where you can.  Also, if based upon your budget, you can determine what assets may be best for you to walk away with in the divorce, once marital assets are divided. Determine What Your Income Will Be: As part of your budget, you will want to consider what your income will be after the divorce.  If you are working, you will know what your income will be from work.  However, you will also want to consider if you will be receiving or paying child support and/or alimony. In Massachusetts, a child support order can run until children are 23 years old, provided they attend college.  Spouses must take this into consideration when factoring their income.  Massachusetts has Child Support Guidelines for spouses to calculate the child support order based on their respective incomes.  Generally, the first $250,000 of the parties combined gross income is used to calculate child support. As for alimony, if the parties have children, and have a combined gross income of over $250,000, then there is a chance that the lesser earning spouse could receive alimony.  There are exceptions to this $250,000 gross income, where a spouse may receive alimony and the parties do not have a combined gross income of $250,000, but these are highly fact-specific circumstances.  If there are no children of the marriage, then there is no minimum income used to calculate alimony.  However, that doesn’t guarantee that alimony will be awarded.  There are many factors considered in awarding alimony, as outlined in M.G.L. c. 208 §53.  Each spouse should consult their respective attorney to determine whether there will be an alimony order in their case. If alimony is awarded in a case, it will be based upon a formula developed when the Massachusetts Alimony Reform Act of 2011 went into effect.  There 4 types of alimony in Massachusetts: 1) General Term Alimony; 2) Rehabilitative Alimony; 3) Reimbursement Alimony; and 4) Transitional Alimony.  Depending on the specific facts of your circumstances, any one of these types of alimony could be awarded in your divorce.  The amount and duration of the alimony will depend on the type of alimony awarded. Determine What Assets You Will Receive in the Divorce: As part of a divorce, all marital assets are divided.  This includes all bank accounts, investment accounts, retirement accounts, stocks, future inheritance, real estate, business interests, vehicles, personal property, and any other property owned by the spouses.  When negotiating the division of assets, consider your income and your budget.  Is it more beneficial to you to receive liquid assets, such as investment accounts, or is it better for you to receive real estate?  The answer to this question is always fact-specific, but you should consider your circumstances, and what would meet your needs most once the divorce is finalized. Retaining real estate can give some continuity, particularly if you are retaining the marital home for the children to continue living in.  However, real estate doesn’t make cash available to you immediately.  The real estate can appreciate or depreciate, and you will not get your equity out of the real estate until it is sold.  Whereas, liquid accounts will give you access to money fairly quickly. Each person should also consider the tax consequences of retaining each asset, as there usually are tax benefits or tax penalties for retaining or transferring certain assets. There is no “one size fits all” answer to this question.  Each person should review their financial circumstances to determine what works best for himself/herself.     Start Your Financial Independence from Your Spouse: Towards the beginning of your divorce, you will want to begin your financial independence from your spouse.  Massachusetts has a prohibition on depleting, transferring, or encumbering marital assets, pursuant to Supplemental Probate and Family Court Rule 411, so you cannot unilaterally deplete, cash out, or transfer any assets.  However, you can begin your financial independence by opening your own individual bank account.  Once the account is opened, you can begin depositing your income into this account, and using this account for your regular living expenses. You may also want to open a credit card account without your spouse as a joint user.  That way you begin to build credit in your name alone. By taking these steps, you begin to segregate your finances from your spouse, and begin to understand how to manage your money without your spouse’s involvement.   Consult a Financial Advisor Depending on the total value of the marital estate, and each spouse’s gross incomes, it may be wise to retain a Financial Advisor, to assist you through the divorce process and give you guidance as to a budget, the tax consequences of divorce, and also what assets you should retain.  There are financial advisors who specialize in divorce, known as Certified Divorce Financial Analysts, who can guide you through this process. Read the full article