This Divorce blog by Law Offices of Barry I. Finkel, P.A. offers information and commentary advise to clients at all stages of the divorce process. We also represent clients in post-divorce matters, such as enforcement and modifications.
You and your spouse have worked hard and earned good incomes. In reviewing your accounts and financial documents as you prepare to divorce, though, something doesn't seem right.
Shouldn't your savings account have several thousand dollars more in it? Where's all the paperwork for the boat your spouse bought to take out on the Florida waters? And come to think of it, what happened to the boat?
A forensic accountant who is experienced with divorce cases will analyze your finances and assets to make sure things are just as they should be and that your finances are protected. Forensic accountants can be quite helpful in divorces since they are trained to conduct investigations into family financial situations.
In a divorce, both parties are required to make financial disclosures that anticipate upcoming expenses such as household bills, insurance, taxes and education, as well as list assets and income, liabilities and debts.
A forensic accountant also can look at property records to determine if perhaps property has been put in the name of someone else, with the intention of transferring it back after the divorce, to remove it from the list of assets. They also will look at bank accounts and credit card statements to look for recent large, unexpected withdrawals or big charges made to joint accounts.
If you think your spouse might be hiding cash or other assets, or perhaps sold one and pocketed the money, be sure to tell your divorce attorney. It probably is time to bring in a forensic accountant as part of your team. You worked hard for everything you have, and you shouldn't have what you are entitled to taken from you. That asset you don't discover, and your spouse doesn't disclose, could be used or sold by your soon-to-be ex.
We've been hearing a lot about the new tax laws that will take effect in January 2019. Now, just weeks away from the new year, let's discuss what Florida residents seeking a divorce can expect.
Shifts in alimony
You no longer can deduct the alimony you pay from your taxes. If you receive alimony, it's not taxable income any longer. As a result of the law change, high-income spouses likely will negotiate to pay less alimony since it no longer will provide the payer with a tax deduction. Divorce agreements must be executed by Dec. 31 for the former alimony rules to apply.
Pre- and postnuptial agreements
The tax laws could affect any prenuptial or postnuptial agreements, even those that have been in effect for years. The new rules could invalidate some provisions in these agreements. Ask your attorney about renegotiating the terms before divorcing, if necessary.
Children as deductions
Children no longer will be tax deductions to be negotiated. The exemption for each dependent was eliminated.
If you are divorcing in 2019 or beyond, you'll want to work with your attorney and your accountant to figure out what's most beneficial for you financially. For instance, as part of your settlement, you might want to grant possession of an Individual Retirement Account (IRA) to your former spouse if you are the higher-income spouse. The responsibility for paying taxes when the money is withdrawn goes with the account holder. The asset you take in return might not come with a tax bill.
Even if you're already divorced, the new laws could apply if divorce agreements are modified in 2019. Be careful and ask your attorney about the ramifications of modifying your divorce agreement.
Going through a divorce can be tough, even under the best of circumstances. Taking some preparatory steps can help the process go smoother.
Preparation can take various forms, depending on your specific circumstances. Some situations may present difficult legal questions, which it is important to discuss with your attorney.
Figuring out finances
Finances tend to number among top concerns for divorcing couples, especially when high-value or complex assets are in the picture. One major part of financial preparation is taking stock of marital and separate property. If you have not been doing so already, get access to all accounts and records. You will need this information to complete the mandatory disclosures Florida courts require. If you plan to engage in mediation or other types of collaborative law, having detailed lists of assets can help you negotiate from an informed standpoint.
Dealing with red flags
Keeping track of finances can also help you notice signs your spouse may be concealing assets or income. Some red flags include changing account passwords without letting you know, making unexplained withdrawals and claiming decreased income without a matching decrease in spending. If you suspect this type of activity, consult your lawyer about ways to obtain proof and protect your interests.
Planning for the future
Another important step to take is to make a budget projecting your costs and income after the divorce. If you will need to find work or obtain training, you may be able to receive spousal support to tide you over and help with the costs of necessary education.
Prioritizing the children
If you have children, the divorce can have a significant psychological effect on them. Working on respectful and productive communication with your soon-to-be ex can decrease the tension and negativity many divorcing households suffer from. The changes in routine a divorce often entails can also present challenges. Talking to your children and preparing them for coming changes can help them deal with the situation.
It's a way to split up by working out an agreement about important things such as child custody and property division mostly on your own. Even if you can't come to 100 percent agreement and need a bit of help in some areas, you can agree to a mediator to help with your collaborative divorce and reach a final settlement.
Do you still need an attorney?
In a collaborative divorce, the two parties will hire their own attorneys to help finalize the agreement. These attorneys have training in collaborative law and can help bring together differing views.
Some other professionals might join in the process, such as accountants or specialists in custody.
Once you reach an agreement, you eventually will make a brief appearance in family court for a judge to sign off on the paperwork and the settlement. After that, the rest of the divorce process is uncontested and simple.
What are the benefits?
By going through a collaborative divorce, you can keep your divorce friendly. You will voluntarily exchange information without depositions. You can agree on how issues after your divorce will be handled in a civilized manner. Your streamlined legal proceedings will cut way down on costs.
We've heard for years that money is the biggest cause of stress in a relationship, and a recent survey of more than 2,000 adults reinforces that idea. In fact, 35 percent of respondents said money was the biggest trouble point in their marriage.
People with big salaries often have big expenses, and continuing to make enough money to keep up with their lifestyles can cause stress. People who earn $1 million or more a year still might need credit cards to help them make ends meet, and they might not have contributed to retirement funds or savings accounts.
High-income households also often have issues in income discrepancy: one spouse works and earns a big salary while the other stays home to tend to the house and children. Often, many couples still follow traditional stereotypes, such as men taking care of the money, which also can affect the balance of power in a marriage.
The big-money earner also could spend long hours at the office on travel away from home for meetings and other business purposes, keeping couples apart.
And add this to the mix: as the economy gets stronger and incomes increase, divorces pick up. That's because couples are in a better position to split their household into two and pick up the additional costs of a second place to live. By contrast, when the economy falters, couples tend to stay together because they can't afford the cost to split.
Money can't buy you love, as the old song goes. It also can't buy happiness. An attorney who works with high-asset divorces can help Florida residents come to the most agreeable settlement possible in a divorce.
In a span of just a few years, you met your partner, fell in love, got married and started that Florida business that has supported both of you and your kids well through the years.
But now, years later, life has slowed down. The kids are gone. You've decided the only thing holding you together is that business. Maybe a divorce is in your future.
Just how do you split up when your biggest asset has you anchored to each other?
Few people think about a relationship being torn apart when they are busy building a business together. If you didn't put paperwork in place to determine how you might divide the business in the event of a divorce, all is not lost, however. An attorney experienced in property division can represent your interests.
1. Before things have a chance to get heated between the two of you, talk to your spouse about a postnuptial agreement. The agreement could lay out terms should one spouse decide to buy out the other or perhaps agreeing to sell the business and dividing the proceeds.
2. Have the company valued. There are three ways to do so: the asset approach, which values a company based on its inventory, equipment and properties; the market value, which determines the price it could sell for; and the income approach, which places a company's value on its record of earnings and its estimated future earnings.
3. Do you think your spouse has tried to devalue the company? That can be done by reducing the balance sheet by giving bonuses to employees or adding to the debt. That can be done to make the company less valuable. A judge would not look kindly at that, and if it is shown that was done, could place the value of the business at what it was before those transactions.
Think these things through and be prepared to discuss a plan of action when you meet with your attorney.
Sometimes a marriage just doesn't work out. You still have great respect for each other. You want to work together to co-parent amicably. You are great friends, but just not great partners. Why should your divorce be a battle then?
It doesn't have to be. Divorce mediation is an option.
In mediation, spouses don't hire their own attorneys. Instead, they meet with a mediator, who is a neutral third party. Together, they will talk about what's best for their kids, their finances and their individual and collective goals.
Instead of having a judge make decisions for them, the couple makes the decisions on how they move forward. And they still can have their own family law attorney in Florida review the agreement they have come to before signing on the dotted line to make the divorce agreement official.
What are the advantages of mediation over a contested divorce? Mediation can lead to a divorce in three to five months, whereas it might take up to two years otherwise. It's less expensive. And you won't have to endure a court case with hearings, a trial, court motions or expert witnesses. Best of all, there's no squabbling.
The outcome can leave you with no hard feelings and the ability to maintain a respectful relationship all around.
Mediation might not work for everyone, especially if there is any sort of domestic violence or abuse involved. But mediation can be an ideal solution for couples who are just dedicated to moving on and starting over as painlessly as possible.
When a high-asset couple divorces, sometimes a major drop in one spouse's income means the spouse can no longer pay the agreed-upon child and spousal support income. One high-profile case dealing with just that scenario is making news in Florida. While most people don't have this kind of money, the principle still applies in other case.
The case is evolving between retired baseball star Alex Rodriguez, a resident of Coral Gables, and his former wife. The two share two daughters, ages 13 and 10.
As a member of the New York Yankees, Rodriguez had a 10-year contract that paid him $275 million. Now, according to reports, he makes about $3 million a year as a baseball analyst on television.
Rodriguez reportedly has been paying his ex-wife $115,000 a month in child and spousal support since their divorce in 2008. Now, his ex-wife wants about $50,000 a month, while he'd like to lower the amount even more.
"Alex takes good care of his kids and he has been good to (his ex-wife) but feels he is paying excessive amounts to his ex that should be lowered since he is no longer playing ball," a source told People magazine.
The former couple signed a prenuptial agreement before their marriage in 2002. They reached a divorce settlement in September 2008 that set this agreement in place.
Rodriguez lost about 90 percent of his salary in the past few years, leading him to request this modification. If your income has dropped significantly and you need to request a modification in your child or spousal support, a Florida attorney can offer guidance. The same applies if you find yourself in the reverse situation and are being asked to reduce the amount you receive.