Great Lakes Divorce Financial Solutions provides mediation services as well as detailed divorce financial analysis and planning whether you are contemplating divorce, evaluating options, or planning for your future. Your source for all information related to divorce financial planning and mediation. Empowering and educating clients to make wise financial decisions.
Dealing with a divorce is difficult no matter the time of year but dealing with a divorce over the holidays compounds the stress. It means more time with family who may or may not be on board with this major change in your life. It means hearing opinions that you did not ask for even though they may mean well. It could also mean missing out on some traditions you absolutely love.
From someone who has been there, all I can say is that is really does get easier. The first holiday season either during and/or just following your separation/divorce is by far the hardest.
Here are some tips to help you survive your first holiday season after deciding to divorce:
1. Take Care of Yourself
Recognize that it’s a difficult time of year and take extra good care of yourself. Eat well, get exercise and make sure you are getting adequate sleep. All of these things will put you in a better position to deal with the stress.
2. Do Something Nice for Yourself
I know that at the holidays we often think more about others than we do about ourselves. However, if you are having a difficult time, do something nice for yourself. Get a massage. Go out to dinner with a friend. Take a bubble bath. Do something that will help you feel good about you. I know money can be tight during a divorce but you don’t have to spend lots of money to do something nice for yourself.
3. Make a Plan
Decide how you are going to discuss your divorce before the topic arises with others. Be thoughtful about how much it makes sense to share. It’s fair to assume that whatever you do say will get back to your ex. While that may not really be the case, it might make you think twice about what you say or how you say it.
4. Be Flexible When It Comes to your Children
Being flexible is key, especially if there are children involved. Remember that children want to spend time with both parents. If you won’t be with your kids on the 25th, simply plan a “Special Christmas” when you will be. There is no reason to give up anything, just rearrange.
5. Don’t Spend it Alone
With all of the changes you have going on in your life right now, it’s easy to cocoon in your home and avoid family and friends. Resist the temptation. Reach out to people who care about you and will be supportive.
6. Establish New Traditions
Let’s face it. Sometimes going through a divorce means you are divorcing friends as well. This is especially true if you and your soon-to-be-ex shared all of the same friends. If you have done everything together in the past, it may be time to start some brand new traditions. Remember, you’re in the driver’s seat here.
Is this your first holiday as a single person?
Don’t let your emotions get the best of you. If this is your first holiday season as a single person it is normal to have some emotional ups and downs, you are still in the grieving process. Do your best to think about your new future and try not to dwell on the past. Think of new possibilities. What are the activities that you’ve always wanted to try but never had the time? Now’s the time to make it happen!
Good luck this holiday season. Remember that you are not alone. If you are struggling, consider attending a support group so you can meet others who are facing the same challenges you are.
The anger in the room was palpable. I was sitting at a round table with a husband and wife who had chosen to use mediation as a way to come to terms on their divorce agreement. According to the wife, the husband had been unfaithful several times throughout their marriage. According to the husband, the two had not been intimate for many years. Regardless of why the couple was now facing the end of their marriage, in order for negotiations in mediation to be productive, we needed to find ways to bridge the divide between them. It’s not uncommon for years of disappointment and frustration to come to a head when couples are going through a divorce. Often, it’s the reason that individuals think that they cannot mediate their divorce settlement.
Negotiating the Nonnegotiable
A couple of weeks ago, I was fortunate enough to attend a continuing education program on this very topic. Dr. Daniel Shapiro of the Harvard International Negotiation Program presented content from his book, Negotiating the Nonnegotiable: How to Resolve the Most Emotionally Charged Conflicts. While Dr. Shapiro has been involved in negotiations in some of the most violent areas in the world, the framework he shared is relevant for even the most personal conflicts. As part of his presentation, he outlined how to counteract the five lures of what he refers to as the tribal mind. Counteracting these temptations are key to bridging the divide and having productive conversations in mediation.
The Tribal Mind
The tribal mind is characterized by a “me vs. you” mentality. Even if you have never participated in a divorce mediation before, I’m sure that you can see how easy it would be to be lured into the tribal mind. The biggest problem with the tribal mind is it makes people feel like things are non-negotiable and thus, the issue cannot be mediated. Being able to remain rational is key to decision-making in mediation. It is also the key to bridging the divide between parties who cannot see eye-to-eye on anything.
When our identity feel threatened, a whole set of emotional forces lure us into conflict. – Dr. Daniel Shapiro
Counteract these temptations to bridge the divide in mediation
Here are the five lures that Shapiro presented:
Vertigo is when time and space collapse. While I try to have clients focus on the future when going through mediation, it is common for memories to bring them right back to moments in the past – moments that may have happened last week, last month or even ten years ago but it feels like they are happening all over again. When in Vertigo, parties are unable to think clearly to make decisions about the future. Judgment is clouded with all of the emotions from the past. The first step in avoiding Vertigo is recognizing that it is a problem that can hinder progress in mediation. Staying in the present moment and focusing on what you want your future to be like is critical.
Taboos may be the elephants in the room. Consider if there is something that should be discussed that has not been. Also, consider if the topics that are being addressed are ones that you do not feel comfortable addressing and where that discomfort is coming from. According to Shapiro, taboos can be handled in three different ways: (1) Accept it, (2) chisel away at the issues, or (3) tear it down.
3. Repetition Compulsion
Repetition compulsion has to do with conflict patterns. Is there something that is triggering the same conflict in your relationship. Is the trigger bringing you into the cycle of conflict so you are unable to move forward? Sometimes there is comfort in the predictability of the cycle. It can actually become a part of our identity over time. While there may be comfort in the pattern, it has consistently proven unproductive. In mediation, we need to consciously choose to participate in a new pattern that leads to resolution.
4. Assault on the Sacred
Assault on the sacred is about feeling like the most important aspects of your identity are under attack. When going through a divorce, you are going through it with someone who knows you very well and knows what is most important to you. It is important that you both make a commitment to respect what each holds sacred throughout the mediation process.
5. Identity Politics
Identity politics is the last lure that Dr. Shaprio identified in his presentation. Identity politics has to do with whom we build affiliations. I always encourage clients to keep the conversations in mediation confidential. I recognize that many feel the need to blow off steam as they work through their divorce settlement. However, discussing the conflict with family and friends has the potential to pull you out of rationality and into emotionality.
Mediation is an Option Worth Considering
Many couples believe that their divorce cannot be mediated. It is not an easy choice. However, if Dr. Shapiro can help political leaders with negotiations in mediation in some of the most violent areas in the world, I have to believe that mediation is a possible solution for more couples than who realize it. Divorce is difficult no matter what process you choose. Mediation gives you the greatest control over the process as well as the outcome.
If you are recently divorced and not sure what to do with your ex’s retirement account, you are not alone.
It is very common for one partner to handle all of the retirement accounts in a marriage. In fact, I get calls all the time from individuals who are extremely frustrated because they’ve been divorced for over a year and never moved all of the relevant accounts into their own name. There is often a lot of confusion around this issue.
With respect to receiving a portion of an ex’s 401(k), here’s the first question:
One of the biggest mistakes that a person can make after a divorce is not following up on the QDRO. I really encourage clients to have the QDRO drafted prior to their final court appearance if at all possible. That way, it can be signed by the Judge and submitted to the plan administrator right away. Keep in mind that each plan has its own QDRO requirements so you’ll want to be in touch with the plan so you know what is required.
A Qualified Domestic Relations Order (QDRO) is not required for most IRAs and Roth IRAs. However, you will need to submit a transfer form and potentially open a new account (if you don’t already have one) to get those investments moved into your name. If you are not sure about the process or the form that’s needed, contact the financial institution where the investments are held. It is worth noting that there are some exceptions where a QDRO may be required to divide an IRA. This is why it’s important to do your research as you prepare for your divorce. Know what documentation will be required to divide accounts. It is usually easier to get these forms signed as part of the divorce process rather than after the fact.
If the thought of researching these issues on your own is overwhelming, having a Certified Divorce Financial Analyst (CDFA) as your advocate can be very empowering. A CDFA regularly works with clients on transferring assets as a result of divorce and can help you to navigate your financial institution.
Assuming you have already filed your QDRO or you’ve transfered other retirement assets into your own account and you’re now wondering if you should leave your ex’s retirement account as is, here’s my next question:
What is your goal with these retirement funds?
After your QDRO is accepted by the plan administrator, you will receive a letter asking how you want the funds to be distributed. Options could include maintaining an account at the current firm, rolling it into an Individual Retirement Account (IRA), and/or a cash distribution. As you are deciding what to do with the funds, carefully consider the tax consequences of your selection. I always encourage clients to contact me when they receive the form so I can help them to fill it out correctly. A simple mistake on the form could be extremely costly.
Worse yet, I’ve seen several people not fill out the form at all. Whether it’s because they don’t open their mail regularly or they just did not understand the consequences of doing so, the plan may just cut you a check if they do not know how to handle your distribution. If they send you a check, they are required to withhold 20% federal taxes. Depending on the amount of the check and your overall income situation, you could still end up with a substantial tax liability from this distribution. Bottom line, make sure you fill out the form. That way, you are in control of how the funds get distributed to you and you have greater control over the tax consequences.
What is your time horizon?
As you consider what to do with the funds, determine if you have an immediate need for cash. If so, plan accordingly. You will likely be able to do a partial cash distribution from the plan. However, as mentioned previously, you’ll want to carefully consider the tax consequences as well as the longer term financial implications of doing so. If you are taking a cash distribution directly from the 401(k), you may be able to avoid the 10% IRS penalty for early withdrawal if you are under age 59.5 but the distribution is still taxed as ordinary income.
If you plan to keep some or all of the funds invested, what is your time horizon? Do you plan to keep the funds invested for another 10, 20, or 30 years? If so, this should help you to determine an appropriate investment strategy.
What is your tolerance for market volatility?
Your tolerance for market volatility may be significantly different from that of your ex’s. If it is, you will likely need to reallocate the assets to more accurately reflect your personal investment objectives. If you don’t have any idea how comfortable you are with market volatility, I’m guessing you have not been involved in handling your investments in the past. This is all the more reason to evaluate whether or not the existing strategy is relevant to you. Working with a trusted financial advisor to help you determine an appropriate investment strategy can help with your confidence if investing is new to you.
Is it possible to keep your share of your ex’s 401(k)?
The short answer is yes but this varies from plan to plan. Check with your specific plan for details. I generally do not recommend it because a 401(k) is designed by the employer for the employees. Non-employee participants do not get the same benefits as employee participants such as the ability to take a loan on the account.
One advantage of keeping the separated account is that you may have access to or be able to keep certain investments that only employees of that company have available to them through the retirement plan. If you would like to remain invested in those shares, this would be one way to do so.
On the flipside, if you keep the account as it is, you may not have as many investment options as you would if you rolled it into an IRA. Also, rolling the funds into an IRA that is in your name will give you greater control over the funds.
What should you do with your ex’s retirement account?
Stop stressing. We recognize that deciding what to do with retirement assets that you have post-divorce is not always simple. It’s a personal decision that is about your financial goals and objectives. Your ex should not influence your decision. I strongly encourage you to consider these assets as part of your overall financial plan. If you are not sure how to transition these assets into your name or you have other questions, contact us. We have helped hundreds of clients smoothly transition their assets. You do not have to go through this alone.
While we are located in Ohio, we have an active virtual presence and work with clients nationwide. Let us help you ease into your transition to financial independence. Schedule a complimentary consultation.
I recently participated in Stacy Brookman’s Emotional Abuse Recovery and Resilience Summit. The topic I offered was a Financial Guide to Moving on From an Abusive Relationship. If you find yourself in that situation, I cannot recommend the summit enough. More than 40 experts shared on various topics. It was truly inspiring. For those who are looking for the more information on the financial topic of leaving an abusive relationship, here are some basics on establishing a solid financial foundation for yourself. By taking the time to prepare yourself (if possible), you will be off to a more stable beginning in the next chapter of your life.
Leaving an Abusive Relationship: 5 Steps toward a Strong Financial Foundation
Get your financial documents organized
Find a place where you are going to store your financial documents. If you are concerned about raising any red flags, you may want to store them with a family member or friend instead of in your home. You can get a small file box. If necessary, consider using a safety deposit box at a bank. Here is a list of items you may want to store there (some may not be relevant for your situation):
Birth certificates for you and your children
Social security cards
Mortgage and/or other loan documents
Credit card statements
Retirement account statements
If you need to request any of these documents and do not want them mailed to your home, set up a post office box.
Take a financial inventory
For some, you may know this as a statement of net worth or your personal balance sheet. Regardless of what you call it, I’m referring to a document that lists all of your assets (bank account, retirement accounts, real estate, business interests, valuables, etc.) and liabilities (loans, credit cards, and other debts). You may not have all of the information but you’ll want to include all that you are aware of. Also, go ahead and identify accounts that you know exist even if you do not know the value.
Also, take an inventory of your insurance coverage. Insurance is an important way to protect yourself from major financial losses. Identify the types of insurance you have, the carrier, the owner on the policy, the benefits and the beneficiaries.
Establish your own financial identity
For many who have been in a long-term relationship, it is common to have all of the finances combined. However, if you are planning to be on your own, it’s important to establish your own financial identity. This can feel like an overwhelming step for some but it can also be incredibly empowering. For starters, you’ll want to get a bank account that is in your name. When opening an account in your name, be cautious regarding any mail that will be generated from opening the account. Again, you don’t want to draw any attention to your preparations. Banks do, however, require a physical address when opening an account so while you can provide them with a post office box for mailing, you will need to provide a physical address in order to open the account.
Also, if you do not have a credit card that is in your name, be sure to open one. This is different from being an authorized user on someone else’s account. When you are an authorized user on someone else’s account, they can remove you from that account at any time. Also, you are not establishing your own credit history. If you are married, you will be able to use your household income to open a credit card even if you do not have your own income. Make small purchases with the credit card and pay the balance off in full each month in order to develop a solid history of making consistent payments. A good credit history is necessary for things like getting an apartment and/or a loan down the road.
Create a spending plan
Yes, you may also know this as a budget but let’s face it, many of us simply do not want to talk about budgeting.
Start with your income. Include your employment income as well as any other sources of income. If you are not currently working, do some research on jobs that you would be eligible for to determine your earnings potential. Glassdoor is a great resource for salary research. If you are using your home computer to do research, use a private browsing window or incognito tab on your browser so the next person who uses your computer does not see what you have been researching.
In addition to your income, you’ll need to get a sense of your expenses. If you are leaving your relationship, your expenses will likely change substantially. Here are some categories to consider when thinking about your expenses:
Here’s the tough part. How do your income and expenses compare? If your income is substantially higher than your expenses, that’s great! Unfortunately, that’s often not the case. Going from one household to two means a significant increase in expenses so that may mean you need to determine ways to close the gap. In some cases, public assistance might be available to help you close the gap. In others, you may need to look at increasing the hours you work or taking on a second job to make ends meet. Regardless of where you stand, knowing your starting point will help you to determine the best way to move forward.
If you have taken these steps to create a solid financial foundation for yourself, congratulations! I recognize that leaving an abusive relationship is extremely difficult both emotionally and practically. However, you are well on your way to being financially empowered. The next steps are a little different for everyone depending on the specifics of your particular situation. If you are contemplating divorce, I strongly encourage you to meet with a Certified Divorce Financial Analyst (CDFA) who can guide you through the process.
Financial infidelity can show up in a wide variety of ways and can range from minor offenses like that credit card he doesn’t know about to far more serious deceptions like filtering money to family members over many years to siphon off a personal nest egg from marital assets.
Marriage is challenging in many different ways but if dishonesty is in the mix, it can be disastrous. Trust must be the foundation of any good relationship and erosion of trust will destroy a marriage at record speed. When we talk about infidelity, most people’s thoughts immediately turn to the cheating spouse who’s taken a lover. Financial infidelity, while often more subtle, can potentially be even more devastating.
How do you know if you are the victim of financial infidelity?
Here are 5 signs that you should watch for:
#1 – Unexpected inquiries or other activity on your credit report
With the increases in identity theft, monitoring your credit report is important to your financial health. A review of your credit report could give you some insight into accounts your spouse may have opened and/or tried to open in your name. It will also let you know if someone has been using your accounts without your knowledge.
#2 – You never see your bank statements, tax returns, and/or other financial documents
One spouse should never handle all the finances without meeting monthly to go over your balance sheet and goals. Your monthly financial date is the perfect opportunity to get yourselves on the same financial team! If you’ve never done this, start now. If you ask and the “keeper of the finances” gets nervous, procrastinates, or doesn’t want to meet with you, it could be a major red flag!
#3 – Unexplained Mood Changes
Is your spouse becoming easily agitated? Do they pop off with anger or impatience that are out of proportion to the event? When financial turmoil hits, it causes STRESS! And that stress will reveal itself! While stress can rear its ugly head at any time, pay close attention if your spouse becomes easily agitated when dealing with anything related to the finances.
#4 – A Lifestyle That Doesn’t Match Earnings
Is your spouse a highly paid professional but you haven’t had a decent vacation in years? Do you share a modest income but live an extravagant lifestyle? Are you on an “allowance”? Do you have to ask permission for any purchases? All of these could be indicators of financial infidelity and shouldn’t be tolerated in a mutually respectful marriage.
#5 – Mail Stops Being Delivered
If you notice that a certain credit card statement comes every month and always has and then it stops, beware. Ask about it, of course, but a very common method of financial deception is to have bills sent to the office or a relative’s so they aren’t discovered.
These things are no fun to deal with and I’ve seen this type of behavior ruin one marriage after another. When it comes to money, honesty is always the best policy, especially between spouses. Have a conversation with your spouse today and be sure you’re both on the same page.
If it has gotten to the point that you are considering divorce, please contact our team for a complimentary strategy session. We can help you through the divorce process so that you feel confident in your financial future going forward.
Spousal support (also known as alimony) is a hot-button issue for many of my divorcing clients. Let’s face it. Nobody wants to write a check to their former spouse every month. If you are the recipient, do you really want to have to rely on ongoing support from your former spouse? That’s why some consider a lump sum spousal support buyout rather than receiving it on an ongoing basis.
What is a Spousal Support Buyout?
A spousal support buyout is when the payor pays the spousal support obligation in one lump sum rather than paying it out over a period of time. It can be done with a cash payment from one party to the other or it could be done through the division of marital property. In other words, one party agrees to give up a portion of their share of the marital assets in lieu of paying spousal support.
Why Might a Buyout of Spousal Support Be Right For You?
Clients consider a buyout of their spousal support obligations for a variety of reason. In my practice, it is most commonly used when there is not enough cash flow to support the monthly obligation. I also see couples choose it as a way to truly cut ties when the marriage is terminated. This could be because one of the parties is already in a new relationship or it could be due to the high conflict nature of the relationship.
It could also just make better financial sense. For example, a buyout of spousal support could give one party the necessary funds for a downpayment on a home or money to further one’s education. Remember, there is no “one-size-fits-all” solution so it’s important to fully understand what is in your best interest when negotiating. If you are not sure, meet with a Certified Divorce Financial Analyst (CDFA) to determine what makes the most financial sense for your specific situation.
Considerations When Calculating a Lump Sum Buyout
In addition to simply determining if a buyout is appropriate for your situation, there are also several factors to consider when coming to an agreement on the buyout. For example, what is a fair amount? A buyout is not calculated by simply adding up the periodic payments. The periodic payments are discounted back to the present value in today’s dollars. In order to determine the present value, both parties must agree on the appropriate discount rate.
Also, keep in mind that the tax treatment on a lump sum differs from that of periodic payments. Last but not least, periodic payments could be modifiable if there is a major change in income and/or end if the recipient of spousal support is cohabitating or remarries. How should that be factored in when determining an appropriate lump sum spousal support buyout?
How We Help Our Clients to Determine What’s Right for Them
To determine if a buyout is right for you, hire a professional with the expertise to guide you. Allow me to work with you either as a Financial Advocate or a Financial Neutral. As a Neutral, I work with both parties to understand their needs and craft a solution that works best for everyone. As an Advocate, I work with one of the parties and his/her attorney to determine the best financial strategy. In either case, I will explain the pros and cons of each approach. This will help you determine which type of spousal support will work best in your specific situation. I will help you calculate a fair buyout (if appropriate) and make sure that you fully understand the short and long-term financial implications so that you can make wise financial decisions.
If you need assistance understanding your financial options, contact us for a no-cost phone consultation.
Last night I was at my mom’s house with my three kids. We were all sitting around watching a movie after dinner and my ex and I were texting about the kids’ schedule for Monday. I asked if he wanted to join us for the movie and to my surprise, he did. Three years ago when we were in the midst of our divorce, I never thought this would be possible in a million years. That said, I cannot begin to tell you how happy it made me that we could all share in this simple pleasure together as a family. For that reason, it is my pleasure to share this important post on how to help your children cope with divorce by guest blogger, Deborah Bankhead.
As hard as a divorce can be on the separating partners, it can be even harder on any children involved. As a parent, it’s up to you to soothe some of their turmoil.
Here are some tips to help you make the adjustment as easy as possible for everyone.
1. Let Them Keep Both Parents
You want your kids to feel as if they’re still part of one family–just spread out under two roofs.
Helping them maintain a relationship with your ex may not be what you want, but it is what’s best. Your kids really do need it.
You and your former spouse should both spend plenty of time with the kids. Sharing the responsibly of raising them isn’t a nice-to-have for either parent: it’s a must.
Your children aren’t soldiers in a conflict with your ex. Don’t make them feel like they must side with anyone. Letting them stay completely neutral in every respect will ease their transition to the new structure.
Here are some healthy habits you can form to help with this:
Only say nice things about your ex around your kids.
Don’t gossip about your ex.
Never ask your kids to keep secrets from their other parent.
Never use them as little messengers to communicate with your ex.
Don’t try to hog them to yourself to “punish” your ex.
Don’t compete with your ex to win favor. Even after a divorce, parenting is still a collaboration, not a competition.
3. Make Your Home a Safe Space
Kids can sometimes feel like they’ve betrayed you by spending time with your ex. Do everything you can to ward off that anxiety.
Your home should always be a sanctuary for your children. Don’t let them feel like they’re bringing the effects of the divorce along with them.
Always welcome them into a safe, cozy home, free from any negativity.
And don’t assume you know their feelings, either. Kids can be better than you might think at hiding insecurities. Go above and beyond to reassure them.
None of it is their fault, right? Your feelings toward your ex don’t affect your love for them. Nothing at all could ever affect your love for them.
You know all that, of course. Make sure they always do too. Make sure they believe it.
4. Let Them Be Kids
Divorce always comes with a whole slew of adult problems. That’s unavoidable, but you should leave those adult problems to the adults.
And your kids? Well, they should just keep right on being kids. Maintain their social life, play dates, sports, and more. These distractions are a great way to keep their thoughts away from doubt and sadness.
Don’t burden them with grownup issues or let them wallow in confusion. Fill their days and nights with good old-fashioned being-a-kid.
Childhood itself can be the best balm for any child’s concerns.
Deborah Bankhead is an Attorney at Varghese Summersett Family Law Group. Deborah believes compassion and patience are required of family law attorneys and she is a relentless advocate for families in crisis. In her spare time, Deborah volunteers to help teens interested in the legal field pursue their dreams and likes to hang out with her cat.