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'll be walking down the aisle soon in Florida, and all the wedding plans are made. You even have a plan for how to maintain your finances after you're married.
You'll keep your own account, and your spouse will keep one too. There will be no commingling of funds, you decide, just in case you wind up divorcing. You each contribute to a joint household account to pay your living expenses, such as groceries, utilities and housing. What you have left over is yours and yours alone, right?
Not necessarily. Once you get married, don't assume that your division of assets would hold up in a divorce or that what you brought into the marriage will be considered just yours.
While Florida is an equitable distribution state, it often can be argued that assets acquired during the marriage by either spouse are marital property. Assets, then, are to be divided fairly but not necessarily equally.
The best way to protect your money in case of divorce is with a prenuptial agreement. By having a prenup in place, couples can get the talk of finances out in the open before marriage and develop a plan suitable to both.
One financial adviser told CNBC that if couples choose not to sign a prenup, it's vital to take stock of their assets immediately before getting married by saving or printing copies of all financial statements to know what assets and debts they brought into the marriage.
If you inherit money during your marriage, keep it separate and don't use it to fund something such as a new bathroom. Once you do that, the money is considered commingled. If you divorce and sell the house, you probably won't get back the money you put into the project.
There is a lot to consider when you get married, and your financial future is a significant part of it. It's best not to make any assumptions about how your money would be split in the event of a divorce. It's wise to seek legal advice about property division before getting married or if you're already married and planning to divorce.
When you decide to divorce, you need professional guidance, but that doesn't necessarily mean you need to hire a lawyer immediately.
You have options, especially if you anticipate your divorce will be friendly and you expect few conflicts. Your first call, instead, could be to a mediator.
The mediator is neutral and doesn't advocate for one party over another. Mediators aren't there to offer legal advice but rather to guide two people to deciding - together -- what is an equitable agreement when it comes to things such as property, finances and child custody.
For couples with no children and/or those who have kept their finances fairly separate, a mediator could be a good start. Mediation is a more cooperative, and less expensive, way to split up than litigation. Since you will have less money individually as you start fresh than you did as a couple, saving money can be crucial in a divorce.
If you believe you can achieve your goals through mediation, you'll still want to call in a lawyer to review your agreement during the process to make sure the settlement is equitable and you haven't missed anything. While skilled mediators are capable of steering you toward a settlement and some are attorneys, remember that they aren't legal advocates for you. You need to have someone working toward just your best interests.
Mediation doesn't work in every situation, and if you find it won't work for you, that still doesn't mean a long, drawn-out legal process must occur.
Another option is collaborative divorce, where you, your spouse and your lawyers meet with the goal of working out all the details. Together, you could reach a decision without expensive litigation.
Despite what we see in courtroom television dramas or in the movies, couples are often able to divorce without hostility and remain on friendly terms, which is ideal if children are involved. Many couples in Florida have found mediation and collaborative divorce successful ways to end a marriage.
You may no longer care for your spouse, but you no doubt worry about how splitting up will affect the welfare of your children. You have probably heard conflicting information on the impact of divorce on children. Will they turn out OK, or will they start exhibiting problematic behavior?
Studies give a general idea of the effects divorce has on children. However, you can get a sense of what the reality will be for your own kids based on the following factors.
Family dynamics pre-divorce
What your family life was like before the divorce will influence how your children will react to the change. If there was lots of fighting, addictive behavior or abuse of any kind, ending the marriage may be a relief to them and lead to positive consequences. However, if the divorce came as a complete surprise, it will be more disruptive to the children. They may struggle with feelings of confusion and betrayal.
Age of children
The age of your children also plays a role. Babies and toddlers have less awareness and understanding. They may experience immediate consequences, such as increased clinginess, but long-term trauma is unlikely. Teens also adjust pretty well, as they have more understanding and independence.
According to Fatherly, those in elementary school face the most challenges because they have years of attachment to the parents and memory of the relationship, but not enough emotional and cognitive development. They tend to internalize the conflict and blame themselves.
Method of divorce
How you choose to divorce can mitigate some of the harm of the event. Litigation is the most contentious, most stressful and longest method. If possible, choosing a more cooperative approach will benefit your children. Mediation and collaboration save you time and money and put you more in control of the outcome. They encourage communication and focus on the children's best interest.
Let's start with liquidating a 401(k), which you might be tempted to do to pay expenses, to make a lump-sum payment to your spouse or to share it. If you do that, you'll wind up with a huge tax bill the following year that you just might not be able to pay, plus a penalty if you're under 59 ½. There are other ways to share retirement accounts that won't negatively impact your finances.
Liquidating a couple's assets generates the requirement to pay taxes. Therefore, it should be the last resort. It's preferable to transfer assets back and forth, kind of like properties on the Monopoly board.
One financial adviser offers this advice in "liquidating" property:
Learn as much as you can about your assets. How much did your home cost? What are the improvements worth that you made?
What would the capital gain be if you sold your home?
If you own a business, have it valued. How much are the building and real estate worth? How about your equipment? What would someone pay for your customer list?
Have anything you own of value, such as collectibles, art or jewelry appraised.
Cash in your 401(k) unless absolutely necessary.
Sell something without getting market value or a fair price in return.
Forget that if you sell your house, the capital gains exclusion for each person is $250,000 when you split the sales price.
Forget to take other taxes into account.
This is just a snippet of what you must consider if you decide to sell all of your assets. You will want to call in a financial or tax adviser to give you information to make some of these decisions, and they will work in tandem with your divorce attorney to provide you with the best guidance possible.
Divorce isn't easy, especially when it comes to dividing the considerable assets you've worked so hard to accumulate together. When you know you're divorcing, you have to protect those assets harder than ever.
The urge to spend. Don't make any big purchases, either, to make you feel better or because you want to spend some money so your spouse doesn't get part of it. You'll want to evaluate your finances after the divorce before buying something like a car, and your spouse also could claim you took money unjustly.
Not considering how alimony affects your taxes. Remember that under the Trump tax plan, you don't get a tax break for paying spousal support.
Selling stocks or taking money out of other investments to pay bills while you wait to finalize the divorce. You could face significant taxes.
Taking money out of your 401(k). If you're under age 59 ½, you'll not only owe taxes on the money, you'll be hit with a penalty. It might seem like a good solution until your settlement is done, but it isn't.
Changing jobs or quitting your job to avoid spousal support. Once you go back to work, you'll wind up in court again to come up with an alimony amount.
Keeping the house if you can't afford it. The person who wants to keep the house will need to buy out the other spouse, and that might not be financially feasible on one income or with just alimony and child support to pay your expenses. Your grand, forever-home just might need to be sold.
Failing to make a financial plan. Going through a divorce is the time to be financially prudent. That includes making a plan that reflects your new financial status.
Your divorce attorney and financial adviser undoubtedly will have other cautions for you. It's wise to listen to their advice. You'll want to enter the next phase of your life in the best financial situation possible.
Divorce doesn't have to be a battle between you and your spouse.
In a collaborative divorce, the two of you can work together to end your marriage on relatively friendly terms by sitting together in a conference room instead of a courtroom. While each party still works with an attorney, it's less expensive than litigating your divorce. Moreover, you likely will stay on friendlier terms, which is essential if you have children.
Still, for collaborative divorce to work, there are some roadblocks you might need to remove.
Anticipate certain sticking points by looking back at your marriage. How, as a couple, did you handle conflict in the past? Did it become hostile? What were the triggers to problems? Before beginning the collaborative process, you and your spouse must vow to be better communicators, problem solvers and compromisers to avoid repeating past conflicts.
Look for warning signs that your spouse is becoming perturbed. Pay attention to their body language and be careful with your own. You know your spouse - and yourself -- better than anyone else, so you will know when it's time to take a break before the discussion gets off track.
If you reach the point that your spouse becomes angry, don't respond in anger. That will make things worse. Watch your instinct to respond. Ask for a quick break and take a short walk. Remind yourself that arguing isn't productive.
Don't let your spouse agitate you on purpose. They might toss out an insult or accusation to get you to take the bait. Take a break so that you don't respond negatively. You might need to end the session and take time to consult with your attorney, therapist or a friend before the next meeting. Use your support system to help you make good decisions and achieve your goals without harming the other person - or allowing yourself to be harmed. That could derail the process, and you must remember your goal, such as staying on friendly terms for your children.
Collaborative divorce is a win-win for your family -- and for you. It's good to know the potential pitfalls as you enter the process. An attorney experienced in collaborative divorce can let you know just what to expect as you enter the process.
In Florida, divorce law follows equitable distribution of marriage assets. When dividing property, courts determine what is fair based on specific factors. Most of the time, this results in 50/50 division, but that is not always the case.
One exemption from this process is separate property. There are some assets that are exclusively yours, meaning your former spouse has no claim of ownership. An understanding of what qualifies as separate property will help you during your divorce proceedings.
Gifts and inheritances
If you receive a large sum of money or expensive asset as a gift from a third party, it is generally excluded from marital property distribution. However, it is important to show evidence that the giver presented the gift to you individually, rather than to you both as a couple.
Likewise, if you receive a bequest from a deceased relative, this inheritance belongs to you alone. This assumes that your family member left the money or asset to you exclusively.
It is crucial that you keep the gift or inheritance separate from other community assets. Once you deposit the monetary value into a joint account, those funds become property of the marriage. In other words, the asset is then fair game for division.
A personal injury settlement may be exempt from the division of property under a few conditions. Awarded compensation must be for pain and suffering rather than the cost of the injury.
For example, lost wages and medical bills affect the finances of both parties. It then stands to reason that both parties benefit from the lawsuit, provided the court grants a settlement on these grounds. Similar to gifts and inheritances, this money becomes marital property once you mix it with joint accounts.
The division-of-assets procedure can leave you with a lot of questions. Ultimately, the best way to protect separate property is to keep it away from the family’s other finances.
You're meeting with an attorney to discuss your upcoming divorce and hear a phrase that is new to you: collaborative divorce. The attorney explains it to you and says you and your soon-to-be-ex could be a candidate for this type of divorce, but you want to learn more before making up your mind.
It's an emerging way to finalize a divorce, created in the early 1990s in Minnesota as a way to promote more civil and straightforward divorces. Since then, the concept has spread from state to state and even internationally.
Under collaborative law, participants are committed to resolving divorces – and the companion factors that include property division, child custody and support, and spousal support – amicably. They agree to negotiate in good faith and fairly.
You still need to be represented by your own attorney, but they also are committed to the process. If either party decides to stop the collaborative process and pursue litigation, then the collaborative law attorneys must withdraw from the case.
In a collaborative divorce, all parties will meet on neutral grounds to discuss the divorce. In the negotiations, both sides are expected to take part in a manner devised to work toward a positive, agreeable resolution.
Other people could be brought into the collaborative process if the sides agree that professionals are needed for things such as asset valuation.
There are numerous benefits to a collaborative divorce over a litigated divorce. Successful collaboration can lead to divorces that are faster and less expensive, and they also can save stress on the relationship between the two people divorcing and their extended families, too.
Despite how often people say that "money can't buy happiness," they often act surprised when wealthy individuals still have troubles in their personal lives. For instance, you often see celebrities and other rich couples head to divorce court, and people wonder how it could have happened when they didn't have any financial stress and really had everything -- materialistically speaking -- that they wanted.
What this shows it that divorce really does happen for a lot of reasons. Being wealthy does not mean a couple will be happy, that one spouse will not be unfaithful to the other, or that they won't have some of the same marital issues as less well-to-do couples, like a lack of commitment or communication problems.
On top of that, some have speculated that the financial side of a divorce is less daunting for the wealthy. They don't have to worry about making ends meet or finding work after a divorce. They're not really that worried about paying the bills and covering court costs. For less well-off couples, it may actually be harder to decide to get a divorce when they have so many financial questions about the future.
That said, a high-asset divorce can be far more complicated. It may be affordable, but there is also far more at stake. People aren't dividing up credit card debt and a bank account. They're dividing assets that could give them financial security for the rest of their lives. The decisions made in court have a drastic impact on their assets. That's why it is so important for these couples to know all of the legal options they have.
Divorce in Fort Lauderdale is never easy to go through, yet many high-value couples do not realize just how much is at stake besides finances and assets. They may have more money and access to resources to help them secure the outcome they want, yet it is not uncommon for them to drop the ball because they want to engage in a full-on war with their partners over unresolved marital issues.
Not putting looking past marital concerns and negative feelings can make the separation process for wealthy couples more challenging and tedious to resolve because there exist more unique challenges than the average divorce. To better prepare for a high-asset divorce, careful consideration of the following issues is necessary.
Haste could have bad consequences
Most people want to minimize the length of time it takes for them to get past unpleasant circumstances. Divorce is one situation where caution and careful consideration of every detail and concern are necessary. Rushing through the process to avoid the negative emotional aspects and the soon-to-be ex-spouse could lead to critical mistakes like agreeing to a less-than-fair or deserved amount for child support, spousal support or share of marital assets, as well as unfavorable child custody and parenting arrangements. Though it is possible to revisit some of those concerns after the divorce is final, post-divorce-judgment modifications are not freely given and are dependent on the circumstances. It is far easier and more favorable to do what is necessary to ensure a good outcome the first time.
Experts can help level the playing field
In many high-value marriages, one spouse is the sole or higher earner, leaving the lesser-earning spouse with fewer resources to protect financial interests. It is important for all divorcees to understand the value of having expert financial guidance during a high-asset decoupling. Experts can provide factual information and guidance to help prevent one spouse from misleading or deceiving the other. They can locate hidden assets, provide accurate valuations of business and all assets and provide advice to help the lesser-earning spouse get more of what she or he deserves, wants or feels is fair out of the divorce. They can also help the higher-earning spouse protect interests and come up with alternative options for the division of assets that preserve wealth.
No matter how much money is at stake in a high-asset divorce, honesty is always the best policy. The courts assess a variety of factors when making decisions. Any actions and statements that involve deception and dishonesty can have a negative impact that results in a more favorable outcome for the more credible party.