Smarter Divorce Solutions provides services to individuals, couples, attorneys, and mediators to provide financial expertise to those embarking on divorce. With advanced training in all financial aspects of divorce including pension valuation, marital vs. separate property, taxes and tax optimization of settlements.
So, let me start by very clearly stating, I am NOT an attorney! I don’t give legal advice or draft legal documents. What I do is help individuals and couples navigate the financial side of their divorce settlements. And while the actual statutes governing marriage and divorce in Arizona are available to anyone on the Arizona Legislature website, (Title 25, chapter 3 is the chapter on divorce) with my help, couples can mutually agree on a settlement that works for them and their family and thereby avoid facing the law.
That being said, everyone going through divorce needs to understand what MIGHT happen if they can’t settle and end up in front of an Arizona judge. I have personally been through my own litigated divorce and represented many individuals that did litigate their divorces in Maricopa county and have learned a thing or two about the interpretations of AZ laws in the courtroom as well as just the “mood” of our courts. So let me give you the bottom line.
First, know going in that almost all 50 states now have no-fault statutes. Very simply this means that no one cares who cheated, who lied, who is generally a jerk, etc. It just doesn’t matter! Now when it comes to the children and parenting, it might, but not in your settlement. If you have the belief that you will have your “day in court” to finally be heard, let it go! It’s not going to happen.
This is the most misunderstood area of divorce in Arizona and often the most disappointing for a spouse expecting a substantial long-term award of maintenance. In order to qualify for maintenance, a spouse must lack “sufficient property, including property apportioned to the spouse, to provide for that spouse’s reasonable needs.” Notice that it does not say anything about the “marital standard of living”. That is a HUGE difference between our state and others like California, New York or Illinois where the marital standard of living is considered on the front end.
So what is someone’s “reasonable need”? Boy, is that a grey area or what? If a couple has been living on more than $200,000 per year, all earned by one spouse, how much is “reasonable” to support the non-working spouse? In my experience, it’s an absolute coin toss. One judge might determine that amount to be $36,000 and another judge might say $60,000.
Now other parts of the statute do allow the judge to consider the lower-wage spouse’s contribution to the education and success of the other spouse while sacrificing their own career along with other factors but it’s all very subjective and treated differently from one judge to the next.
The other big surprise is the duration. Our statutes basically say that maintenance will only be awarded for a long enough time for the lower-wage spouse to become self-supporting. Opinions have changed on whether the marriage contract still translates to a lifetime agreement. So even if you’re in your early-mid 50s, plan to go back to work. If that includes getting some education first, that’s ok but you need to have a plan.
“Custody” is no longer a word used in Arizona divorce documents. We have “Legal Decision Making” and “Parenting Time”. The courts will pretty much always start with a presumption of joint decision making and as close to equal parenting time as possible. Now of course if there are domestic violence issues or other serious things that might endanger the children, those things are taken VERY seriously. But if your concern is that when the kids are with Dad, he parks them in front of the TV and lets them watch TV all day, let it go. Each parent now has the right to parent in any way they choose as long as it doesn’t damage the kids.
And take it from me, the kids figure it out. Let them find their own relationship with each parent on an individual basis. You worry about YOUR time with the kids and let the rest go. Step one to moving on in a healthy way.
This blog only covers a tiny slice of the Arizona divorce laws so read those statutes and ask your attorney or other representative the questions you have. Education is power. Good luck.
Your marriage is over and unfortunately the emotions are too high to make mediation a realistic option or for whatever reason, you’ve chosen litigation. If you’ve read any of my blogs, you know that I’m not a big fan of litigation for divorce. I’m also realistic enough to know that sometimes you have no choice. So if you must go down that path, here are some vital things to ask up front when you’re interviewing attorneys.
1. “What percentage of your cases typically go to trial?”
The reality is that only about 5% of divorce cases typically go to trial. Trust me when I tell you, you DO NOT want to be one of them. No one wins at trial. So ask this question to find out just how “litigious” your attorney is. The more they go to trial, the less likely they are to work towards settlements and the more likely you are to pay an inflated bill!
2. “What are your processes for reviewing the accuracy of the financial affidavits?”
This one may surprise you. In my experience, only the highest end, most experience family law offices even question the accuracy of a financial affidavit. They take your word for it. They also take your spouse’s word for it. Even if you have no concerns about dishonesty, I have yet to see a financial affidavit that didn’t have at least one mistake. This is what child support and maintenance will be based on! IT IS CRITICAL that they are completely accurate and free of mistakes.
3. “Is it ok if I add a divorce financial planner to my team?”
Again, if the answer to this is anything but “yes”, BEWARE! Why would an attorney not want you to have all the information you need? Don’t be surprised if your attorney doesn’t know anything about CDFA®(Certified Divorce Financial Analysts®) professionals and their work. Although attorneys are very protective of their billable hours, most are not interested in delving into the intricacies of the financials of your case. And without financial expertise, they won’t really want to do anything other than opt for a 50/50 split on everything which is RARELY the best thing for any couple. A CDFA® can save the two of you thousands of dollars in both taxes and attorney fees.
4. “I want to keep the house but don’t have enough equity to refinance. What are my options?”
In my experience, most attorneys will say you have 2 options, either refinance the home or sell. Now some will say you can keep the house as long as your spouse will allow you to keep their name on the mortgage. I’ve never heard them suggest other options. Here are a few options that a CDFA® can help you explore.
– Continue to own the house jointly for a few years, usually 3-5, at which point you either sell or refinance and split the proceeds.
– Continue to own the house jointly for a few years, usually 3-5, but the spouse not living there would receive other assets in lieu of his/her share of the equity. To protect their credit, a clause can be written in that you must provide proof of mortgage payment each month and if at any point the mortgage is more than 30 days past due, the house must be sold.
– Continue to own the house jointly and rent it out. A CDFA® can help with the terms of such an arrangement.
5. “Will my spouse and I have an opportunity to try to negotiate a settlement?”
I find that most attorneys just shuttle written offers back and forth between you and your spouse’s attorney without offering you a settlement negotiation meeting. As long as you are paying for the document write-ups and responses, they will produce them. Imagine how productive it would be if you both could meet in a room with your attorneys and actually speak to each other on each point. Ask if your attorney is willing to do this.
These top 5 will have you off to a good start to find just the right attorney for you. Good luck and best wishes.
When you fell in love and got married, you never imagined that your relationship could drift so far from those initial feelings. The love, respect, and admiration that once flourished morphed into something unrecognizable and even dysfunctional right before your eyes. Regardless of how or why it ended up this way, there are some things to think about before you make the irreversible decision to divorce.
Is It Really Over?
First and foremost, are you certain you’ve done everything you can? Have you sat your spouse down and been brutally honest about how you feel, what you’re thinking and what you need? If not, then is it really fair to expect them to know where you are? Have you insisted on seeing a counselor? When you do, be ready to commit to giving 100% of yourself to the process. These steps can help you avoid some future regret and you may even find what you two have lost.
Yes, It’s Over
If you are convinced that the relationship is irretrievably broken, then the next step is to start thinking about your future. Understand that the same money that supported 2 households will now have to support one and you will BOTH have to take a drop in your standard of living. Think carefully about what you will be able to afford and consider meeting with a financial planner like me to evaluate your options and look at what potential settlements would look like in your situation.
Be Clear About Finances Now
If you are not 100% clear on your financial situation, now’s the time to get prepared. Download my eBook for specifics on documents to gather so that you can be fully informed about your household finances. It will be very difficult to plan for the next phase of your life if you have no idea how much money you’ll have or how much it will cost you to live. A Certified Divorce Financial Analysts®, or CDFA® can be a very valuable resource for you at this time.
The Next Chapter
Finally, build a support network . The next 6 months to a year will be one of the most difficult times of your life. Surround yourself with people that will love and support you without being judgmental. You’ll need all the support you can get. Take a deep breath and take one step at a time. You WILL get through this.
Are you beginning another new year with uncertainty? Uncertain about your marriage? No clarity around your finances? Often, the fear and uncertainty around where you stand in life can be paralyzing. But believe me, unlike in “Bird Box,” things do become a lot clearer when the blinders come off.
Of course, during marriage, the road will get bumpy sometimes so you brace yourself and continue on until you reach the smoother roads ahead. But for some couples those smoother roads do not appear. A common response is to just ignore the problem, but that’s the worst thing that you can do.
What’s The Problem ?
The productive thing about facing the problem head on is that you can take a look at what is really going on. It may be solvable. It may be that you need to look within. My marriage isn’t loving, so show more love. My marriage isn’t romantic, so create more romance.
You may need to try to be the change you want in your relationship. On the worst side, it may be time to let go. The important thing is to take your head out of the sand and start making decisions to change the situation.
If you can pinpoint that you and your spouse always fight about money and the struggle is becoming too much, you can find a way to plan your spending and set goals together. Addressing where money goes ahead of time will curb some of the disagreements that arise after the money is spent.
Money Worries vs. Money Reality
When you look at what is really going on financially, you may find that it is not as bad as you thought. It may be as simple as paying attention to what you spend to turn things around. It may look like a marriage is doomed because of constant fighting when what’s really needed are some plans and agreements around money and spending to eliminate stress and fighting.
If you need help with taking that look at your finances, you are in the right place. Our Smarter Money Solutions program was created to help our clients get clarity around their finances so that they can identify where the problem really lies. You can join us for the next group meeting to get started.
Is this it? Is this the first time since the birth of your babies that you will be forced to spend at least part of the Holiday without your children because of separation or divorce? It’s no fun. But it does get easier after the first year. I remember mine. I sat in front of the Christmas tree by myself and bawled my eyes out. Not exactly my finest moment. Had I to do it over again, it would be very different. Let me help you with a few tips.
Post-divorce holiday tips from a divorcé, who’s been there.
Accept that life is different now and will never be the same again and IT’S OK!! Embrace change!
Don’t wait until the last minute to coordinate the schedule with your Ex. And remember that the kids want to spend time with BOTH parents.
Christmas Does Not Have to be Dec 25th
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.
Don’t Spend it Alone!!!
If this is your first Christmas without the kids, reach out to friends and family. Invite yourself if you have to!
New Traditions are a Great Thing!
To help both you and the kids embrace the new reality, start some brand new traditions that you’ve never had!
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 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! Take an art class! Schedule a weekend trip out of town with a girlfriend or a spa day all by yourself. Of course, I’m a financial advisor so keep the festivities within your budget.
Speaking of budgets, don’t let yourself fall into the “best parent” trap and try to outspend your ex on presents. The kids see right through it and trust me, they don’t care. Don’t get me wrong, they’ll love all the gifts – for about 2 seconds. I remember buying my son a really expensive software program that I thought he’d love and that darn thing just sat unopened for years. Kids need your time not your money. Pass on the iPad and buy a board game that will force you to interact with each other for an extended period. These are the memories that all of you will treasure.
Good luck this Holiday season. Remember, it doesn’t have to be defined as the end unless you choose to. Choose to see the beauty of a new beginning. You can do it!
It’s the most wonderful time of the year and you have let it sneak up on you once again. If you are like many Americans, you certainly plan to purchase some Christmas gifts for the family but may not have socked away money towards the effort.
I get it, life comes at you fast and so many unexpected things can pop up. This holiday season I have clients dealing with things as minor as simple car repairs to things as major as divorce. But even inside tough situations, with the right planning you can keep your head above water.
In our Smarter Money Solutions programs, we teach participants how to anticipate every possibility throughout the year, including all the holiday gift giving. The key is to set your emergency funds aside and truly use them for emergencies. For those unanticipated expenses like the washing machine breaking down or a home insurance co-pay because a tree fell on the roof. For those one-off expenses throughout the year that you know are eventually coming, set up a separate fund for them. Common categories are vacation, gifts, licensing and auto maintenance or gifts.
Once you have these categories, instead of putting your money blindly into your emergency fund, you now have a fund earmarked specifically for gifts. So, when your child’s classmate’s birthday party pops up, you pull the $20 for a gift from the gift fund. When Christmas rolls around, you have saved all year towards the amount that you want to spend on the family and pull the funds from that account. This way, you neither come up short on those everyday household bills nor do you have to resort to credit cards to get you through ‘til tax refund time when you can pay off the Christmas debt.
Even if you haven’t set a plan ahead of time for this year, it’s never too late! Get a jump on next year’s spending and start setting the funds aside now! For this year, please go forward and enjoy the holidays. But if you need a little help getting on track for Christmas 2019, visit us at SmarterMoneySolutionsAZ.com. Together, we’ll set a plan for your money instead of playing catch up. We start the Empowerment Zone group meetings in January.
The simple answer is yes, a divorce mediator can easily stay neutral. The simple why, because they are trained to be sympathetic to the needs of both parties. Divorce mediators are basically trained to guide each of you through a process of advocating for yourself.
The goal is to make sure the matters that are most important to each individual are addressed. Concerns such as joint child custody, property, financial matters and more, are each discussed with the mediator, who will lead you both down the path to a peaceful resolution.
Divorce is a very emotional time. The process alone of going through litigation typically makes divorce even more costly and nerve-racking. It’s a highly personal action, but the courts handled it in a very non-personal way, so going to court is almost never the best choice. Handling it with a mediator can greatly reduce all that stress. And believe me, the agreements that you two reach together outside of the system will be better than what a judge will dictate to you.
With a mediator, you can also put the children first. Saving them the stress of a court room setting is a huge benefit in itself but making the choice to mediate can make the divorce process a much smoother experience for children. You can make decisions with the thought in mind that on the other side of this you will both still be parents. Discussions with the mediator, in a private setting, one on one, also greatly reduce the emotional capital involved. Part of the mediator’s role is to set the rules and the tone of your meetings. Having someone that keeps things civil and focused makes it easier to see what’s important and reach agreements. The mediator helps individuals avoid those unpleasant moments or work through them reasonably.
The mediator can also assure that the financial well-being of both parties is taken care of precisely by a Certified Divorce Financial Analyst® practitioner. The CDFA® can demonstrate benefits of specific settlement options and advise clients on the most advantageous property divisions easing the financial concerns. Logical decision making can be difficult if not impossible when you are in the middle of divorce. At such a critical time, avoiding potential financial disaster is crucial. Through professional and proper guidance, the CDFA® and mediator can help ensure financial security for both parties as they move into the next phase of their lives.
So, yes, a mediator can be neutral and still help a couple come to crucial agreements that will have a long-lasting effect on the family.
There are certain challenges that we can face in life that present the opportunity to learn a lot about ourselves. I think divorce is falls in that category. It’s a very difficult process to face. You’re confronted with feelings of shock and disappointment and even a mourning that you may not have expected. Divorce has also become such a common experience now that many view it as normal business. Until it’s personal. Until it’s you.
Well, if it is you, now is the chance for a new beginning. It’s time for the second act. What did you always want to do that you put on the back burner, to focus on being a good wife and mother? What are some of the habits and practices that you’ve always wanted to change, but cold never find the time or support to focus on them? What did you learn from your marriage that you do not want to take into your future relationships?
One of the best things the new beginning can offer is a better picture of what kind of life you now want to have and how to provide the financing for it. If you’ve made it all the way through the divorce process you’ve pulled together an account of your household income and expenses. Since you’ve recently had the budget laid out, now is a great time to jump back into that personal money planning mode and get ahead of it.
Our money choices and habits are relatively easy to track and change. Those choices and habits can also be the root of the discord in our relationships. One of the keys to change is finding out what goes into those choices. Are you a saver, because you’ve gone without before? Are you a spender because in the past, you’ve had the luxury of not being worried about cash?
As a divorcee’, you’ll learn that you are a survivor. You’ll learn that you are strong and that new things can make you stronger. You’ll learn that now is the time to start that new class, launch that new business, explore that new idea about making money doing something your love.
If you need help learning how to implement a plan around your newly single financial status, Smarter Divorce Solutions is here to help you implement Smarter Money Solutions in your new life. Join us at our next Empowerment Zone meeting where we will talk about tips and tools to get you started on the path to a smarter personal financial plan.
When you are facing divorce, it’s important to know all the components that make up your marital assets. Especially if the assets include some form of executive compensation. Several of these items provide income and can be difficult to value—or even understand! Let me walk you through a primer and try to take out some of the mystery.
Employee Stock Options
The most common type of non-wage compensation used to be stock options in shares of the employer company. The two primary types of stock options are Incentive Stock Options (ISOs) and Non-Qualified Stock Options (NQs). The difference between the two is in tax treatment and transferability. They both will require some intricate work, specifically if there is a vesting schedule. For these calculations, you just want to bring in an expert to have it done right.
Restricted stock is now the most commonly used form of executive compensation. This is shares of company stock given to an employee as either compensation for past performance or an incentive for future performance. It’s critical to get the actual grant documents to know which the case is. It makes a big difference when determining how many of the shares are Marital Property. They can be in two forms, either actual shares of stock (RSAs), or a right to acquire shares at vesting (RSUs). Again, the marital portion can be quite complex to calculate, but critical that you have it done. This is another job for that CDFA® (Certified Divorce Financial Analyst) or other specialist.
Employee Stock Purchase Plan
This is a benefit wherein the employee is allowed to buy company stock at some regular frequency, usually at a price that is discounted from the current market price. When the shares are purchased, they can be sold immediately or held at least a year for more favorable tax treatment.
Deferred Compensation Plans
With this option, the employee can choose to defer some portion of current compensation until a future date. These deferrals may be salary, bonus, or even equity compensation. Sometimes the employer will also match these deferrals. They are totally discretionary so any spousal maintenance should be based on total compensation before any deferrals. Also, any balances in the plan are likely marital property as well and should be analyzed carefully.
My spouse has executive compensation and has filed for divorce. Now what?
Do yourself a favor and bring in a CDFA® as early as possible, preferably before the discovery phase. The CDFA® will be able to provide you with a list of exactly what documents will be necessary to properly value the assets and determine marital property vs. separate property. This will prevent any last minute scrambling if you end up at trial. Most CDFAs® are qualified to do this but not all. Be sure to find one versed in executive compensation who feels comfortable with the task.
It will also help if the CDFA® is available for any depositions so that he or she can be qualified as an expert early and preview for the other party the quality of financial information that you’re having prepared. Sometimes this is just what it takes to encourage a settlement!
The CDFA® can also help ensure that the final Settlement Agreement is written to properly reflect the way the compensation will be handled. Executive compensation accounts are not usually eligible to be given to a non-employee spouse at the time of divorce so the employee spouse must have very specific instructions on what must happen to specific shares, options and grants upon vesting that takes into account the taxation responsibilities, etc.
Executive compensation can be very complicated and if you take it on yourself, you’re exposing yourself to a lot of risk. These assets are often substantial pieces of the marital pie and it is critical that they are valued correctly so that you can negotiate your settlement confident that you are really receiving what you’re entitled to. This is one area you don’t want to scrimp on. This expert on your team could single-handedly get you thousands of dollars more in settlement by ensuring that EVERYONE has all of the correct information.
Divorce really messes with your mind. I know because I remember. The once intelligent together woman that I am turned into an emotional, brain-fogged, unorganized basket case. I was not at my best even though I tried very hard to keep it together. I wanted so much to sit down and focus and plan my future but felt paralyzed and surrounded by a pea-soup fog of indecision.
What’s your role when it comes to the family finances? Do you handle the bill paying? Are you “in the loop” on all your bank accounts or are you in the dark? What about investment accounts or retirement plans? Do you have any? If you’re in the dark, you need someone to help you turn the lights on – and FAST! If you and your spouse are cooperative, ask for statements on all your asset accounts and your most recent tax returns so you can find a CDFA® practitioner to help you out and bring you up to speed. A CDFA® professional is specially trained in the financial aspects of divorce and will be your best friend in this process! He/she’ll clear out that brain-fog like a Santa Ana wind!
THINK ABOUT YOUR FUTURE
Of course, this will be hard, but start thinking about what the next phase of your life looks like. Unfortunately this has to happen at the same time that you are grieving what you THOUGHT the next phase was going to look like. But if you allow yourself some space, it can actually be fun. You now have the chance to start over again. What did you used to dream of doing that got lost while you were married? Is it time to go back to school? Maybe a cool downtown loft condo should replace that huge family home that you had to keep clean. Whatever you dream of, you will need your budget and financial picture top of mind. That way, if your dreams outsize your wallet, you know you have some serious planning to do!
BUILD A SINGLE IDENTITY
Often through marriage all the credit cards, mortgages, loans, etc. are in the names of both spouses. All of those accounts will have to be closed or converted. Immediately open a checking and savings account in your own name to begin the process of establishing your own financial identity. Be sure to put some things in place while you’re still married because after the marriage is over, your credit picture may not be nearly as strong. Next, find a good rewards credit card to apply for in your name alone so that you will be assured of having access to credit post divorce and maybe even during if legal fees are necessary.
These steps seem small but are valuable first steps to get you thinking financially and looking out for your future. You can get through this, and a little help from a CDFA friend is a great place to start.