Simple Tools: The Financial Affidavit

Why, When and How to use your Finanical Affidavit.

The most important tool in your divorce is frequently the most over-looked, and avoided. Even its name is off-putting; but it is the key to understanding all of the other issues which arise. It is called (drumroll, please), “The Financial Affidavit” (yawn).

Frankly, most people should keep a current finanical affidavit available whether or not they are contemplating divorce. A financial affidavit is just a form that shows you how much you have in income, expenses, liabilities and assets. While these may sound like no-brainer questions, most people cannot accuratelty answer these questions off the top of their heads. Sometimes one member of a family knows all the answers and the other just relies on that person. Sometimes neither party can answer them. Rarely, but sometimes, both parties are very aware of all of the finances.

It is surprisingto me how often a client – or an opposing party – resists using the simple form available on the Judicial Branch websites of most states. It can be a little complicated the first time you look at it (for example, in Connecticut, you have to divide every monthly amount by 4.3 weeks). But the value of this tool far outweighs its inconvenience.

Here is a link to the CT “Long Form” to give you a sense of the questions it poses. https://jud.ct.gov/webforms/forms/FM006-LONG.pdf

WHY: Look, I hate to be the one to tell you, but divorces frequently come down to a set of financial decisions. After the child-rearing and emotional issues have been resolved, it is similar to a business transaction. People want to know: How much child support will I have to pay or receive? How much alimony? What portion of the debts and assets will be assigned to me? The answer to these basic and all-important questions is not a secret magical formula. It is a direct function of the information contained in your own personal finanical picture.

Simply put, better informed is better prepared. Building your own financial affidavit will likely compel you to ask questions and make some calculations that you never thought to ask. Questions like how much money do we spend on restaurants each week? How much equity is in our house right now? Do we have retirment accounts, and how much are they worth? Not only is this good information for the court. It is good information for you. If you are trying to imagine what a post-divorce future will look like, knowing your finanical picture can help define those scenarios. Picture knowing how much money you would have if you sold your house; how much disposable income you have right now; and what you are paying for health insurance each month. These are the questions people pay attorneys and financial consultants to help them figure out. And, ironicaly, you are the only one who can get them the information which unlocks these secrets!

WHEN: Early and often. If you bring a completed financial affidavit with you to your first meeting with your divorce attorney or mediator, you will save yourself time and money getting to the heart of what the case will entail. In most jurisdictions you will need to disclose the information within the first few weeks of any divorce action, and so will your spouse. So, why wait? Get the information to your attorney as soon as you can. The earlier your lawyer or mediator is informed about your case, the more accurate they can be in looking for an appropriate resolution.

FAQ: Why should I divulge my information to my spouse? Aren’t we going to be fighting about this? Shouldn’t I keep it a secret?

Answer: The court will compel you to share all information, anyway. Any knowledge which is not exchanged voluntarily is likely to come out on the witness stand – either in depostion or at trial – anyway. But, of course, voluntarily costs less time and money.

HOW: Despite the mysterious-sounding 4.3 weeks rule and all of the detail (weekly grooming costs!?), these forms are straightforward once you understand them. And, as with so many things, the internet has made the work easier than ever. Start by finding your most recent paystubs, tax returns, mortgage loan statement, and credit/debit card statements (these can be downloaded from your banking institution). These 4 sets of documents will provide you 80% of your necessary information. When you are ready to get started, set aside one hour of time. Supply yourself with one scratch copy of the form to work on and a blank copy to fill-in later, a sharpened pencil & eraser, a calculator, a note pad for jotting questions or doing calculations, and a tall glass of your favorite beverage. Preferably non-alcoholic, to cut down on mistakes. Then, start filling in the blanks. Any questions you still can’t answer, just make a note and move on.

Pro tip: On your first time through the form, use the figures as you find them. If your mortgage is a monthly amount; write it that way. If you spent a total of $5,000 on vacations last year; write it that way. Get your figures all in one place; convert it to weekly later.

Once your first draft is complete you have a choice – you can stop there and give the draft and your supporting documentation to a professional to complete for you. You have already saved yourself hours of professional fees by making a solid first draft. Or, you can go for it and convert the figures to weekly on your own. It is not so hard. Any monthly amount gets divided by 4.3. Any annual amount gets divided by 52. So, if you spent $5000 on vacations last year, you would put $96 as your weekly vacation budget. If your monthly mortgage loan payment is $2000, that’s $465 per week.

And now – here’s the icing on the cake… you have created your own financial snap shot! If you are not getting a divorce, you have a realistic budget to use when you plan for future events. If you are going through a divorce you now know what each of you should have when the smoke clears. Even if its not much, at least you know what it is!

What We Love: Divorce is an opportunity for growth. Taking charge of your life begins with understanding your finances and leads to your own empowerment.

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Don’t Take Your Ex’s Word for Everything

D-College-CostsI received a call this week from “Tony,” a fictitious name for a man I represented in 1998, when he and his first wife had a 3 year old son together.  He has been a generous and involved father to his child from that marriage for the entire 15 years since his divorce. He paid child support on time and in full even when he was diagnosed with Leukemia and had to take a medical leave of absence from his job for two years. He never missed a payment. In fact, he was never even late with a payment.  He has since remarried and has an 11 year old son with his current wife.

We’ll call the first son John and the second son Jacob.  John came on every vacation with Jacob and their dad and his wife.  John has played as many sports as Jacob, he has gone to as many ball games and concerts and family picnics with their dad as Jacob has.  The dad never lost his connection to John, never let the new family exclude John. John and Jacob know that they are half-brothers, but they feel that they are brothers.

In all his years of paying more than the court ordered by staying current with child support, and adding whatever extra-curricular activities he could, of making sure that John and Jacob both had health insurance, glasses, braces, cleats, and haircuts, Tony and his second wife always knew that once John turned 18, the child support payments would end.  The love, and care, of course, will never end.  But they were able to budget their lives knowing that in July of 2013, they would essentially get a pay increase.

Imagine Tony’s surprise, then, when he received a phone call in August from his ex-wife (let’s say “Tina”) telling him that he needed to start paying for John’s college tuition room and board.  Tony and Tina both have copies of the same divorce agreement they signed in 1998.  They both read the same words.  Tina saw it and read, “Tony has to pay one –half of full tuition, room and board at a state University.”  She figured that meant that if those costs are now about $12,000 per year, that it was time for Tony to start paying her $6,000 per year.  If John goes away to college, or stays home with her should not influence (in her interpretation) how much money Tony owes her.  She figured she could take $6000 from Tony, and have John take out student loans for anything else he needed.  She just saw that paragraph as another pay day for her.

Luckily, Tony called me.  I have to admit that I could not at first recall the specific language of the agreement.  When we discussed it by phone and he said that he was obligated to pay half of John’s college, I thought that might be true.  But I asked him to bring me a copy of the agreement anyway, so I could read it myself.  It seemed like a bigger commitment than Tony would have made.

I told him that because of his illness, if necessary we could move the court for a modification, but that is a last resort.  Remember, if Tony had to pay me to represent him in court, and Tina got an attorney, too, all of that money would be directed away from John’s education and into lawyer fees and court costs.  The worst possible scenario, if you ask me.

Sure enough, he brought me the signed agreement and court orders and as soon as I had a chance to read them, I could see the confusion.  The agreement is that both parties will help John get as much financial aid as he can get, and then the two parents will pay equal shares of what is left; but not more than the cost of a state college. If Tina pays $5000, Tony has an obligation to match it.  But if John only needs $5000 from his parents; then Tony is only responsible for half of that amount.   The best part, to me, and to Tony, is that none of this money will go to Tina.  John will continue to have his dad helping him get through life and do what he needs to do; but all of Tony’s money will be going directly to John’s benefit, not by way of Tina – and not to lawyers’ fees.

What We Love:  It is always worth having an attorney read a legal document for you.  It might cost you an hour of the lawyer’s time, but it could save you thousands of dollars in mistakes.

Being the Best You In a Divorce

ImageI met a policeman last week.  He has been divorced 8 years and his youngest child just turned 18 after graduating high school.  His child support orders are through, over!

He spent a little time discussing the divorce process with me.  He and his wife each had their own lawyers, and they each spent quite a lot of money going through the paces that their lawyers advised. He’s a cop and she’s a teacher, so a lot of money to them has long-term implications.  It doesn’t get replaced in the next bonus cycle.  But, neither of them knew anything about divorce, so they did what they were told to do, and fought when they were told to fight, and let the Judges rule about how they would divide their parenting time and their retirement accounts, and their personal belongings.   Even talking about it this many years after the fact, he seemed sad and remorseful about the way he and his wife had spent that year of their lives.

But, not bitter. Not angry.  Just like someone who had gone down the wrong road in a maze, and was now out the maze and on with his life.  We talked a little about his kids, where they go to college; what they study, how often he sees them.

On the topic of visiting days and holidays, there was a lot of the word “we.”  As in, “we have them all home every year for Thanksgiving.”   I imagined his new wife or current girlfriend was the other half of that “we” and that she was probably a good person to embrace, and be embraced by this man’s children from a former relationship.  But, as he kept talking, it became apparent that the “we” with whom these kids spend their school vacations are their parents.   Both of them, Mom and Dad; long divorced Mom and Dad.

“Oh,” he assured me, “we don’t see each other every day, or anything like that.  We each gotta’ have our own lives.”

“Every week,” I asked.  He stopped and thought. No, probably not.

“Every month?”  He did not have to stop and think. He just said “Of course.”

I had to ask, “Why do you ‘of course’ see each other every month?”

Then he got a little sheepish, as he admitted that he still goes by her place on the first week of the month and pays her child support.  There are no children and the court order had ended, but he knows that she relies on that money to pay her bills and make ends meet.  And he couldn’t face himself if he cut her off just because the last kid was out of the house. “What kind of dad, what kind of man, would I be?” he asked me.

I told him he is a good man.  He knows he is.  I don’t know how long he intends to go on giving his ex-wife money.  Maybe she knows enough to be saving some of it for when he no longer has the ability just to help her because he wants to.  All I know is this: for now, he gets to be part of the Mom and Dad who spend every holiday and visiting day with his kids, he is welcomed in his ex-wife’s house whenever they feel like seeing each other, and – the most important part of all – he can look himself in the mirror and like what kind of man he is.

WHAT WE LOVE:   Bad marriages and bad divorces all end, one way or another, but good people are always good people.

– Sharon Oberst DeFala

How Being a Taker Plays Out in Divorce

selfishYou know these people – the ones who weigh every relationship, every opportunity, as an opportunity to “get” more.  We’ll call them the Takersons.  A Takerson has two friends, one owns a boat; the other does not.  One Saturday evening the Takersons have dinner plans with their non-boat friends.   Everyone has hired babysitters, arranged their plans, and made the appropriate reservations. Everyone is getting ready to go out.  The Takersons get a last-minute phone call from their boat friends, “Our plans tonight just got canceled.  Are you busy?  Want to come over?”

Obviously there are a few available responses at that moment, such as, “Thanks for the call – we’ll have to take a rain check because we already have plans.”  Or, “We have dinner plans with other friends, but the more the merrier – why don’t you join us?”  Or, “Depending on what you have in mind, would there be room for 2 couples; we were already planning to see our other friends.”   Or, the standard Takersons response, “Yes.  We will just tell our friends that something better came up.”

Well, in my experience, when Takersons get divorced, things are not much different.  If there are two televisions, some people might say, “We each get one.”  Others will say, “You take the newer one,” or even “I’ll keep the newer one.”  But a Takerson says, “I’ll need both, you can go buy your own.”

Takersons say sentences like, “I’m sure your mother intended for me to keep the engagement ring when she gave it to you for me,” and “If I don’t end up using the lawn tools I can always sell them later,” and “Child support is one thing, but you will still have to pay for the kids’ shoes and clothes and haircuts.  I can’t pay for that stuff out of my money.”

Sometimes Takersons even stay married for surprising reasons.  “I hate that S.O.B., but if we get divorced, I would have to get a job to make ends meet,” or “If we get divorced while her parents are still alive, I might be cut out of my share of their estate.”

To me, the best part about watching a Takerson in action is the moment of revelation (when it comes) at the end of a long strenuous and expensive battle, over something like a flat screen TV.  I do not always have the opportunity to do this, but when I can, I like to analyze the cost-benefit ratios. Such, as a new TV would have cost you $800.  The motion you filed to keep it cost your attorney three hours, plus your wife’s attorney three hours. So that comes to $ 1500 in out-of-pocket costs.  Add in the fact that the time spent in court keeps both of you out of work for the day.”  No matter who wins that argument – whoever gets to keep the TV – there is a net loss to the family of money, time, and good will.

In fact, this is a somewhat minor example.  I have seen people fight about an engagement ring, including two court hearings, (and the papers and preparation time necessary for those two hearings) trips to two jewelry appraisers, and  the result in which a jeweler had to be hired to remove the stone from its setting.  One party kept the setting, the other kept the stone, and had to make an additional payment to balance the cost of the stone.  So, the wife’s cost of keeping “her” setting, and fighting over her ex-mother-in-law’s diamond cost her approximately $7500. The cost of keeping his mother’s stone cost the husband around $10,000.  The attorneys made a combined profit of $15,000.

A simpler solution might have been for the husband to say, “Here is $5000 in cash – go buy yourself a ring that you like and let me keep my mother’s ring.”   Even a Takerson would be compelled to say yes in that situation!

What We Love:   Even if the person you are divorcing is the greediest person in the world, look at the bright side – at least you won’t be married for much longer!

– Sharon Oberst DeFala

Don’t underestimate the value of your in-laws…

inlaws

What is the value of keeping your in-laws in a divorce?

I recently heard a woman make an argument that she should be entitled to increased alimony because she lives closer to her in-laws than to her own parents.   Many states use a rubric of factors to determine alimony. Factors may include  length of the marriage, causes of the breakdown of the marriage, each party’s education/station/ability to earn a living, age and needs of the minor children.

One factor I have never seen listed in an alimony calculation, however, is geographical location of grandparents.  I don’t believe it is something we will see any time soon.  We live in a time when it is common place for people to relocate far from family for work, exploration, curiosity, advancement, and countless other reasons.  So there is no special attention paid to how close or far one lives from one’s parents.

But, the woman does have a point.  Her parents happen to live in Mexico, and she lives in New Jersey with her husband and two children. They are in the process of getting divorced and she is keenly feeling her lack of support system.  If she lived close to her parents and siblings and cousins, there would likely be someone around to take the kids for a few hours; or help her move into her new apartment; to drop by uninvited and unexpected with a pizza and a bottle of wine.

Sure, friends may be able to pick up some of this slack.  But only very good friends, and not necessarily without strings attached. Not the way family would.  But what makes her situation more difficult is that up until very recently, she did have family in town – her in-laws.  She was used to the informal, always at each other’s disposal, give-and-take of family.  When you have spent a certain number of years not having to pay a sitter for every little night out, each annoying errand, or when you just need to go away overnight, there is a shock factor that comes along with suddenly having to shell out $10/hour for each of those “meaningless” excursions.

What about family holidays?  Until now, every major holiday included her children looking forward to aunts, uncles, grandparents and cousins laughing together at someone’s house.  They knew there would be gifts and favorite foods, “inside” jokes, and familiar arguments.

Now, she will have to choose if her children will spend holidays with their extended family or with her. She might need to take her kids to a restaurant for a Thanksgiving dinner, or cook her own Christmas feast to make them feel like things are still as good as they used to be.  Or she might want to fly herself and the kids down to Mexico, so that she can be with her own family during the holidays.  But, while being with her own parents and siblings might make her feel comfortable, it will likely have the opposite effect on her children, for whom everything will feel foreign and new.

Or, if she believes the best interest of her children is to keep having holidays the way they always did, then she might spend every holiday all alone, watching the clock until it is time to go pick them up again.

Instead of increasing her alimony, which might not even solve most of these issues, there is a less expensive and more obviously available solution:  keeping her in-laws.  Those people who are inextricably linked to the last person in the world she wants to see right now may hold the ticket to her salvation.  But, depending on the details of the divorce, they might not be particularly interested in seeing her right now.

They have likely heard her husband’s side of the story. They might believe that she alone is at fault in the breakdown of the marriage.   They may have been willing to keep an open mind in her regard at the beginning of the divorce, but by now might feel that she is being stubborn or greedy or hostile in the divorce proceedings, even if it is her attorney calling the shots instead of her.

How, then, could she bridge that chasm?  Is there any hope for her of replacing her far-away family for herself and her children with the people she knows best in New Jersey?  Yes. There is a chance. That chance is in her hands.  It is up to her to reach out to her in-laws.  Individually, if necessary, to mend any broken fences, and say things as simple as, “I hope that we will still be family, and that my children will always feel as close to you as they do today.”  And, of course, she could take advantage of every opportunity to be kinder and more generous than she needs to be – both when her in-laws are watching, and when they are not.  In matters related directly to the divorce, and in unrelated matters. She could make a point of always something positive about her ex-husband, so that everyone knows there are no hard feelings. And so that no one is worried what will happen if they are both at the same dinner.

This might sound difficult, especially if she has just cause to be truly angry at her husband.  But we do the same thing in dozens of social situations all year long at parties, work, and school: pretending to be nicer, more forgiving, or more generous than we really are.  And sometimes, if we are very lucky, those good feelings catch up with us and stop being pretend emotions. Sometimes acting as if you are a benevolent person actually makes you become one – inside and out.

What We Love: The loving family you seek might be closer than you think.

Staying Together for the Children

Family-clip-art

“Staying together for the children,” my personal pet peeve. If you want to benefit your children – show them how one gets divorced with grace, dignity, generosity, and resilience. The WAY people handle their divorces is what will influence their families for generations. When you have an opportunity, I recommend the Childrens’ Bill of Rights, below. I frequently have my clients hang one on mom’s fridge & one on dad’s fridge.
©AAMT REPRINTED WITH PERMISSION

CHILDREN’S BILL OF RIGHTS
– Every kid has rights, particularly when mom and dad are splitting up. Below are some things parents shouldn’t forget – and kids shouldn’t let them – when the family is in the midst of a break-up.
– You have the right to love both your parents. You also have the right to be loved by both of them. That means you shouldn’t feel guilty about wanting to see your dad or your mom at any time. It’s important for you to have both parents in your life, particularly during difficult times such as a break-up of your parents.
– You do not have to choose one parent over the other. If you have an opinion about which parent you want to live with, let it be known. But nobody can force you to make that choice. If your parents can’t work it out, a judge may make the decision for them.
– You’re entitled to all the feelings you’re having. Don’t be embarrassed by what you’re feeling. It is scary when your parents break up, and you’re allowed to be scared. Or angry. Or Sad. Or whatever.
– You have the right to be in a safe environment. This means that nobody is allowed to put you in danger, either physically or emotionally. If one of your parents is hurting you, tell someone – either your other parent or a trusted adult like a teacher.
– You don’t belong in the middle of your parents’ break-up. Sometimes your parents may get so caught up in their own problems that they forget that you’re just a kid, and that you can’t handle their adult worries. If they start putting you in the middle of their dispute, remind them that it’s their fight, not yours.
– Grandparents, aunts, uncles and cousins are still part of your life. Even if you’re living with one parent, you can still see relatives on your other parent’s side. You’ll always be a part of their lives, even if your parents aren’t together anymore.
– You have the right to be a child. Kids shouldn’t worry about adult problems. Concentrate on your school work, your friends, activities, etc. Your mom and dad just need your love. They can handle the rest.
– IT IS NOT YOUR FAULT AND DON’T BLAME YOURSELF.

Great, right? It is a good idea to discuss this list with your children. If the divorcing adults and children can all have the discussion together, even better. Children are not too young to understand these rights; they will only absorb what is pertinent to them. Children are not too old to discuss these rights with their parents. It can open up some pretty surprising – and helpful – dialogues.
The key, of course, is communication. Children who are encouraged to speak honestly and openly about their parents’ divorce will have an easier time getting through it. But, even more importantly, people who learn from a young age to be good communicators are less likely to divorce in their own marriages as they get older.

What We Love: Divorce is an opportunity to be the best parent your child has ever known.