AAML NJ Blog

By Elle Barr | Our Family Wizard, AAML NJ Bronze Sponsor

A co-parenting schedule can help you raise a family across different homes. Check out this comprehensive guide on the popular 2-2-5-5 custody schedule. Download a free parenting schedule template, learn from expert tips, and see if this rotation will fit your family.

What Is a 2-2-5-5 Custody Schedule 

A 2-2-5-5 custody schedule is a shared parenting rotation that splits parenting time 50/50.  Parents split time into two-day and five-day blocks. Many experts like this schedule because parents keep the same days every week, making it easier to remember. 

You’ll often see the 2-5-5-2 schedule rotation referred to as a “custody schedule” or a “parenting schedule.” 

Joint physical custody is a parenting arrangement where both parents have physical custody over their children. The children rotate their time living with each parent often on a set schedule. When deciding on a schedule, co-parents consider various aspects like work schedules, children’s schedules, children’s ages, and distance between housing to select a parenting plan that works for your unique situation. For those who want shared custody, a 50/50 split can be an attractive option. 

50/50 custody schedules split parenting time equally. This schedule has grown in popularity, with many co-parenting feeling it is fair and gives kids adequate time with both parents. But a 50/50 custody schedule might not be right for all families. For one, splitting time down the middle introduces complexities that not all co-parents may be equipped to handle.  Instead of one house being the dominant residence, parents with 50/50 custody must balance the logistical challenges of frequent exchanges with the emotional burden of long times apart.  

Terri Breer, a family law attorney and mediator from California, says co-parents have a lot to think about even when they have agreed to share parenting time equally. “While they may want a schedule that allows for equal parenting time with each parent, co-parents need to consider additional schedules. For example, there might be a better way to break up the weekly parenting schedule, particularly if their work schedules or children’s needs suggest a different arrangement.” 

The 2-2-5-5 parenting plan offers many benefits for parents who decide that a shared schedule will work best for their children. This rotation keeps the days of the week consistent between co-parents and minimizes time apart.

Key Takeaways: 

Read the full blog post HERE.

By Leap US, AAML NJ Silver Sponsor

As New Jersey matrimonial attorneys start to review different software solutions for their law firms, they will come up with a list of features that they want the solution to include. While it is essential to ensure that the software contains all the features your firm needs to run and operate efficiently, it is equally essential to ensure that the software offers seamless integrations with other common office and legal solutions. These integrations may include tools your firm already uses or new solutions that can provide additional automation and value to your firm.

In this blog, we will cover the four reasons that New Jersey family law firms should add integrations to their legal software wish list.

 Keep Your Current Systems

Most law firms are already using common office systems like Microsoft Outlook for email management, Microsoft Word for document assembly and management, and Microsoft Teams or Zoom for internal and external collaboration. If a firm’s staff members are happy using these systems, it is essential that any new system easily integrates with those tools to reduce resistance to change and create a single source of truth. For example, Office 365 integrates with LEAP across multiple workflows. Emails sent and received in Outlook automatically save to the correct matter for all staff members to see the latest correspondence with a client. Additionally, LEAP for Word enables matrimonial attorneys to automate document assembly, instantly track time spent on a document, and have it all saved back to the electronic matter. The Microsoft integration does not require your staff members to shift away from the systems they’re comfortable with and saves them countless hours in administrative work with enhanced features.

 Reduce Manual Work

The main goal of any software implementation is to create less work across the business to improve productivity and reduce redundant work across the law firm. Where a software solution does not have a native feature to address a challenge matrimonial attorneys face, it should offer an integration that will provide a solution. Let’s take legal calendaring as an example. LawToolBox exclusively integrates with LEAP so that New Jersey matrimonial attorneys can have peace of mind when managing their cases. In a matter of clicks, they can manage critical dates and deadlines related to their cases as reminders populate into their Outlook calendar. This automation eliminates the need for attorneys to manually create reminders, check for updates, and manage timelines. Additionally, it helps to reduce errors caused by missing deadlines which helps to retain the practice’s and attorney’s reputation and maintain client trust and satisfaction throughout the process.

 Simplify Client Communication and Collaboration

In today’s world, clients expect to be able to access documents and updates at all times and through the convenience of their phone or personal computer. Therefore, family law firms need to identify software solutions that have integrations with a secure and simple collaboration tool that their clients can access. A prime example of this is LawConnect’s exclusive integration with LEAP. LawConnect provides one place to share legal documents between lawyers and clients securely. Matrimonial attorneys can send their clients documents to collaborate using the comment, reply, and sign features online from multiple devices. Not only does this allow clients to quickly and easily provide feedback, but it also creates a secure, single version of truth for attorneys to access the most up-to-date file and have an entire history of any changes.

 Improve Cash Flow and Get Paid Faster

Ultimately, New Jersey family law firms will struggle to stay in business if they do not have a healthy cash flow. Therefore, the legal software firms choose should offer integrations that simplify billing, invoicing, and payment so that firms can bill more regularly and accurately while getting paid faster. For example, RapidPay, powered by LawPay, integrates with LEAP to provide a secure online portal for clients to submit online payments via credit card. In addition, RapidPay generates payment footers on invoices, automatically produces receipts, and sends payment reminders to clients. These features help firms get paid faster and make it easier for clients to make payments with a user experience they’re comfortable and familiar with. From there, QuickBooks Online and Xero integrate with LEAP to complete law firm accounting without having to key in the same information multiple times into several systems.

 Conclusion 

Whether a law firm has no legal software or is looking to change its current tech stack, they must choose a software solution that offers the integrations they need to have access to everything they need to run their firm efficiently. The LEAP legal practice productivity solution provides comprehensive features and several integrations that enable New Jersey family law firms to create a single version of the truth while running a productive and profitable practice. Learn more at leap.us/new-jersey.

By LEAP US, AAML NJ Silver Sponsor

As technology continues to improve how we complete everyday tasks and increase clients' expectations of the law firms they choose to work with, New Jersey matrimonial attorneys need to identify software solutions that can help automate their firms' business functions. In fact, 47% of law firms plan to increase technology adoption and usage to help support automation and efficiency across their practices.

As your firm looks at automation tools to stay competitive and improve its overall success, LEAP has put together a checklist of the six legal software automations every New Jersey family law firm needs.

Document Creation & Management

Document creation and management are among the most common tasks that cost law firms several hours a week. Matrimonial attorneys can spend many hours, if not days, drafting and organizing complicated legal documents for all of their cases. These processes can lead to lawyers working more than 40 hours a week to compensate for the lost billable time or missing out on the opportunity to take on new cases because they do not have the resources. While legal forms are not one size fits all, an effective legal software will offer document automation features that auto-populate documents in seconds. These features should cover common documents like letters, retainer agreements, and court forms that would typically require hours of copying and pasting data. As less time is spent on repetitive, manual document completion, attorneys and their staff members reduce time spent on fixing accidental data errors, increase their focus on billable tasks, and potentially increase the number of clients they can take on.

2) Time-keeping Practices

Regular and accurate time-keeping practices are essential to maintaining a successful and profitable business. However, it is often neglected due to the inconvenience of traditional time tracking tools. When attorneys are on a call, in court, or on the go, they do not have the time to manually start and stop a timer to log the time into a paper-based timesheet. This means that lawyers must go back and estimate how much time they spent on a call, preparing a document, sending an email or letter, and in court. Unfortunately, these estimates are often inaccurate, so your firm loses out on thousands of dollars due to delayed and incorrect invoices. As New Jersey family law firms consider automation tools, they should ensure that automated time tracking is a key feature of the software. When attorneys have a tool that automatically logs their time and the data can be auto-populated in an invoice, it immediately has a positive impact on a firm's bottom line and gives the firm a better growth trajectory.

New Business Development

Building a solid connection with a new client starts before your firm even takes on a new case. Clients expect the firms they partner with to be modern and efficient while providing high-quality legal services, starting with the intake process. Automated client intake shows potential clients that you are committed to modern processes and making the process as seamless as possible from the beginning. For example, clients should be able to upload all their documents, schedule a call, and book an in-person meeting without having to go back and forth with you or your staff to find a convenient time or provide their information and documents multiple times. Additionally, once your firm takes on the case, the software should allow attorneys to instantly create a matter that can be updated with new documents, tasks, and all communication records.

Internal & External Collaboration

Document sharing and collaboration are key to the client-attorney relationship once you take on a new client. As family law cases deal with highly sensitive and confidential information, it is essential that clients can rest assured that their data is being stored, shared, and sent securely. If your firm uses tools like email or third-party tools (i.e., Dropbox, Google Drive, etc.), your firm cannot ensure data security. An automated document collaboration and sharing tool should offer the highest level of security while allowing attorneys, firm staff, and clients to leave comments, reply, and provide e-signatures directly from their phones or desktop computer. In addition, the collaboration tool should be fully integrated with where all case information is stored to reduce time spent uploading files, potential errors, and the risk of security breaches and noncompliance.

Billing & Invoicing

Did you know that nearly half of legal clients are more likely to choose a firm that accepts electronic payments? That means your firm could double your profits simply by having the option for your clients to pay by credit card, wire transfer, or even a common payment app like PayPal. A user-friendly payment system that offers clients a similar experience to common e-commerce interfaces accessed from any device makes it easier for clients to pay their invoices or replenish their retainer. Additionally, more payment options and reminders give you a competitive edge over other New Jersey family law firms that do not offer multiple, modern payment options.

Legal Deadline Management & Calendaring

There’s never a good way to tell a client you’ve missed a deadline. It gives your client a negative impression and significantly decreases the chances they’ll be a repeat customer or will recommend your firm to other people. Additionally, missed legal deadlines can lead to malpractice and jeopardize your ability to practice, and cost you thousands of dollars in malpractice lawsuits. An automated calendar or docket system mitigates these risks by importing critical court and legal deadlines into your calendar to ensure that deadlines are hit. An automated solution to manage legal deadlines reduces the risk of missed critical dates (and the subsequent consequences). It also enables better time management for New Jersey attorneys and their support staff.

Embracing an Integrated Solution

We recognize that investing in software to address all these business functions individually will be costly and burden your staff members by needing to access multiple solutions for a single case. That is why LEAP offers an all-in-one solution for New Jersey family law firms to automate and streamline every business function. The LEAP legal practice productivity solution offers features for practice management, document management and assembly, legal publishing, and legal accounting so your firm can improve productivity and profitability. When firms partner with LEAP and embrace cloud-based automation, they establish a digital backbone that helps them outpace their competition and address the ever-changing needs of their clients and employees.

As the legal industry continues to embrace the power of technology, automation is essential for law firms to establish business practices that support longevity and profitability. Inefficiency is no longer rewarded through more billable time as clients expect the law firms they work with to provide fast, high-quality, and modern services. LEAP Legal software provides New Jersey family law firms with the features they need across key business functions to help them automate previously manual and redundant tasks and improve productivity and profitability by 30%.

Interested in learning more about how LEAP can help your law firm automate your processes? Learn more at leap.us/new-jersey.

Written by Ronald Lieberman, Esq. | Adinolfi, Lieberman, Burick, Roberto & Molotsky, P.A., AAML New Jersey Fellow

A prenuptial agreement is a binding, written document (contract) signed by two people before their wedding to control their rights and obligations in ways which may be different than what the law would compel on those topics. This contract protects assets and sets forth spousal support or maintenance obligations in case of a divorce. There are some things to know before signing a prenuptial agreement.

CHILDREN ARE NOT A PART OF THE AGREEMENT

Regardless of the desires of the parties, a prenuptial agreement cannot dictate anything having to do with children (such as child support or child custody), whether born before or after the wedding. But, you can dictate financial considerations for children from previous relationships.

AN ATTORNEY IS CRITICAL BUT NOT REQUIRED

You can enter into a prenuptial agreement without an attorney but going down that path can lead to complications. Your attorney understands the details of the law and will ensure you have fair representation in your prenuptial agreement. The attorney will work to make sure the prenuptial agreement is as “ironclad” as possible by detailing everything out in a way that protects your rights and your assets.

FULL DISCLOSURE IS REQUIRED OF INCOME, ASSETS, AND DEBTS

The purpose of a prenuptial agreement is to keep assets and debts separate and to dictate spousal support/maintenance in case a marriage fails. So, without a full and complete disclosure of all sources of income (earned and unearned), assets, and debts, the prenuptial agreement will likewise fail and assets and debts could end up being divided.

By disclosing income, assets, and debts, you are protecting them. Such full financial information is important for a healthy relationship and essential for the agreement's validity.

AGREEMENTS IN NEW JERSEY MUST BE FAIR AT THE TIME OF THEIR ENTRY

In New Jersey, a prenuptial agreement must be fair at the time of its entry, which may be different than how the agreement will be interpreted at the time of a dissolution.

Fair does not always mean there must be a proportionate division of assets and debts, or spousal support/maintenance in line with New Jersey law. But fair will mean a full disclosure of income, assets, and debts, and a relatively equal bargaining power between the parties. The timing of the signing of the prenuptial agreement compared to the date of marriage will also be important in determining fairness.

CONSIDER ENTERING INTO A PRENUPTIAL AGREEMENT WELL IN ADVANCE OF MARRIAGE

One of the worst ideas is to enter into a prenuptial agreement close to the date of marriage. But you will need to hire an attorney, and to discuss the issues with him or her. You will need to compile the information about income, assets, and debts. Your attorney may not be able to provide “laser focus” on your matter because of their obligations and commitments to other clients. So, you should be entering into a prenuptial agreement sooner rather than later compared to the wedding date is the best policy.

PRENUPTIAL AGREEMENTS ARE NOT COERCIVE

You can control the division of assets and debts, and whether and how spousal support/maintenance will be paid. You cannot dictate the behavior during the marriage of your soon-to-be spouse or limit him or her in any way as to how they live their lives during the marriage. You cannot mandate children be born or adopted, or similarly preclude that option. Any such action will lead a judge to invalidate your prenuptial agreement.

Are you looking for more guidance on prenups? Contact one of our Fellows! 

By Christine Fitzgerald | Seiden Family Law, AAML NJ Fellow

Children are the most important consideration in any family law matter, in which the parties have children in common, and sometimes, even when they do not have children in common.  When potential clients come in for a consultation, they often have an idea of what they want for parenting time or the custodial arrangement.  But they often are missing key issues or have a misunderstanding of the law or of custody and parenting time in general.  These are seven of the numerous things to know about custody arrangement in New Jersey:

1. One Size Does Not Fit All: Every family is unique 

Every custody arrangement is unique.  You and your coparent can craft a custodial arrangement and parenting time schedule that works for YOUR family.  

2. Legal And Physical Custody Are Different 

Clients often come in and say I want full custody.  In New Jersey, we have legal custody and physical custody.  Legal custody is who will make the major decisions for the children, such as educational decisions, medical decisions, and religious decisions.  Physical custody is who will be deemed the Parent of Primary Residence of the children and what is the parenting time schedule. 

3. Preference For Joint Legal Custody

In New Jersey, there is a strong preference for joint legal custody whereby the parties have to consult, confer and cooperate with each other to make major decisions affecting the best interest of the children together.  

4. Designation of Parent of Primary Residence

There does not have to be a designation of Parent of Primary Residence in every case, even when one party has more parenting time with the children than the other parent.  The designation is, however, in cases of 50/50 parenting time when the parties live in different school districts to determine where the children are going to attend school.

5. You Do Not Need To See The Future

Custody and parenting time are always modifiable if there is a substantial change in circumstances.  When your children are little, you do not need to anticipate every decision or every possible change that could occur.  You have the option of reviewing and modifying custody and parenting time so long as there is a substantial change in circumstances warranting a modification of the custody and/or parenting time. 

6. Best Interest of the Child Rules

The standard that a Court will be considering your custodial arrangement, parenting time, and/or modification of either is what is in the best interest of the child.  You should consider what you are proposing or requesting in those terms. 

7. Holiday Parenting Time

Coparents often make the mistake of not thinking about how the holidays will play out in real life.  If both coparents have families that live far away and far from each other and both coparents want to spend holidays with their respective families, then splitting the actual holiday (such as Thanksgiving Day or Easter Day) is not practical. Instead, consider alternating holidays so that one party gets Thanksgiving with the children in even years and the other in odd years.  Think about your traditions and what makes most sense for you, your coparent and, most importantly, the children. 

As number 1 above makes clear, there is no right way to craft your custodial arrangement. You have to determine what works for your children and your coparent.  Your children are the most important part of your matter so creating a practical arrangement in their best interest is never wrong. 

By Alex Krasnomowitz, CPA, CVA, MBA | Smolin | AAML NJ Gold Sponsor

Divorce can be a stressful and time-consuming process. Following the end of divorce proceedings, family law attorneys may find that estate planning is the last thing on their clients’ minds. Still, it’s vitally important that clients update their estate plans to reflect their new situation.

As an attorney, you may not be the one working on those estate plans, but part of the divorce process is looking to secure long-term security for your client—and that includes solutions for financial success in the future. 

It is crucial that estate plans are considered when going through a divorce—but it can be a challenge to find the right person to help your client through the basics of estate planning. To set clients up for success in all areas of their divorce, you may have to refer your client to an estate planning attorney, either in your firm or outside your practice. 

By thinking proactively about solutions for your client, you’ll be helping to protect and control their assets while building valuable referral relationships. Below, we discuss a few key considerations for long-term financial planning that might be indicators your client could benefit from speaking with an estate planning attorney.

Using trusts to control assets

Since divorce usually extinguishes an ex-spouse’s rights under a will or other trusts, it is unlikely that a client's property will be directly inherited by an ex-spouse. However, it is still possible that an ex-spouse could have more control over their wealth than they would prefer, especially if they have minor children.

When a minor inherits property, that property is generally held by a custodian until the child reaches the age of majority—either 18 or 21, depending on the state. A surviving parent (including an ex-spouse) may act as the custodian in some cases, which could allow them to make decisions about how assets in trust are spent or invested until the child comes of age. 

Creating a trust (or several trusts) for the benefit of your client’s children is a good way to avoid this situation. Trusts allow the grantor to appoint a trustee with the authority to manage the trust’s assets and make distributions. Since the grantor is able to choose this trustee, your client will be able to ensure that assets within the trust will not be controlled by their ex-spouse.

Different types of trusts to consider

All of the following trusts may play a valuable role in the estate planning process for individuals who have recently divorced: 

Revocable living trusts

Revocable living trusts allow grantors to arrange for the transfer of specific assets to designated beneficiaries. These trusts are commonly used to complement a will, as they allow the assets they contain to avoid the probate process. 

Irrevocable life insurance trusts (ILIT)

Irrevocable life insurance trusts (ILIT) allow the grantor to remove the proceeds of their life insurance policies from their taxable estate by transferring ownership of the policies to the trust. An ILIT also allows the grantor's family to pay estate costs using the life insurance proceeds from the trust.

Credit shelter trusts

Credit shelter trusts can allow the grantor to maximize the benefits of the estate tax exemption and are particularly useful in cases where the grantor has children from a previous marriage but also wants to ensure a new spouse’s financial security. 

Qualified terminable interest property (QTIP) trusts

Qualified terminable interest property (QTIP) trusts may be helpful for clients that have divorced and then remarried. The surviving spouse will receive income from the QTIP trust until their death—after which the beneficiaries are entitled to the remainder.

Making the right estate plan revisions

All of the above strategies may allow your clients to exercise greater control over their estates following a divorce. If you have further questions about any of these strategies and how they may be able to help your clients, contact our experienced accountants at Smolin Lupin at any time. 

And remember—involving an estate planning attorney during the divorce process can be crucial to the long-term success of the divorce agreement. Divorce requires holistic solutions, and the right partner can help you achieve them with the best interest of you and your clients in mind.

Panel discussion facilitated by Sharon L. Klein, Executive Vice President and Head of National Divorce Advisory Practice | Wilmington Trust | AAML NJ Bronze Sponsor

In a three-part video series hosted by Family Lawyer Magazine, Sharon Klein moderated a discussion among Cary Mogerman, Maria Cognetti and Peter Walzer. This powerful team provides insights on notable changes in the family law arena and offers their predictions on how the future of the practice may unfold. 

Watch the videos to learn what family law firms need to do to evolve, adapt and prosper in the future.

Link to the videos here. 

For more information, reach out to Sharon L. Klein at 212-415-0531 or sklein@wilmingtontrust.com.

By Carolyn Daly, Esq. | Daly & Associates | AAML NJ 2022 - 2023 President

You have made the decision to seek a divorce, or to at least get advice about getting a divorce. You have the names for potential lawyers, but what do you ask them?

There are certainly more than six questions that you will want to ask, but these are a good start to help you in making a decision.

1. Do you specialize in divorce cases and what credentials do you hold?

When getting divorced, you want someone who has a lot of experience and hopefully specializes in divorce, particularly if you have complex custody or financial issues. You don’t want someone who is practicing in several different areas of law as they likely lack the depth of knowledge needed to handle your issues.

You also want someone who understands divorce is emotional so that they will work with you on emotional issues. They can also probably understand the emotions occurring on the other side of the case to navigate how issues are approached with them.

2. How will my case be handled in the office?

In some offices, one lawyer will be the only one working on your case. However, in most offices multiple attorneys and other legal staff (e.g. paralegals) will also work on the case. You want to be comfortable with your legal team and know who is working for you. Will the lawyer you consult with be at all court appearances? Is someone else going to handle scheduling or day-to-day questions so that you aren’t billed at the highest rate? Who will be drafting and reviewing documents? You will want to understand how the office works and, if you want the lawyer you are consulting with to be the only one appearing in court, you need to say that in the consult.

3. How do I communicate with the office and receive information on my case?

If you retain a smaller law firm, it may be that the lawyer or one secretary is handling all communications. In other firms, there may be specific communication guidelines – you may not be able to simply “walk in” to meet your attorney, but will need to schedule an appointment, or you may need to work with a paralegal or associate to try to resolve minor issues in your case. You will want to know who you can and should e-mail, text (unlikely), have a phone call with or come in person for a meeting. You also need to remember your attorney is handling other cases, so you should know the protocol for how quickly communications are answered. Having good communication with your lawyer will keep you de-stressed and will also help you clarify and define your goals with your lawyer.

4. How long does it take to get divorced and are there alternatives that might save time and money?

Most people ask this question multiple times during their case, but it is very hard to answer, especially post-COVID with the very significant shortage of judges that we currently have.

While the court’s “goal” is to have your divorce complete (including any trial, if necessary) within a year, that is definitely not the norm at present. In most counties, trials take well over two years, and some trials are paused completely. Knowing that, you will want to ask about what alternatives there are that might assist in getting the case, or certain issues, resolved sooner, such as mediation, collaborative divorce and arbitration to name a few. Find out all your options.

5. What is your retainer amount, the hourly rates for people working on my file, billing cycle and what happens when my retainer is exhausted?

Divorce can be very expensive so you want to understand what you need to pay to get started. And the “cheapest” lawyer may not be the best choice. You also need to know what each person working on your file charges per hour so that you can try to decide who you may need to speak to, or work with, at different stages of the case. You also want to know how often you will get bills so that you can keep track of your retainer and charges. Finally, you want to know what you will have to pay when the retainer runs out so that you can plan ahead. 

6. Now that we have talked a little about my case, how would you approach it?

This person is going to be representing you and working with you to get you what you hope to achieve in the case. So, you want to know that the way they would approach your case, or certain issues aligns with your goals and approach. You may want a very aggressive lawyer, or one who takes the high road, or one who can be either, when necessary. You may be willing to compromise on certain issues to achieve favorable results in others and you will want to know if the lawyer would agree to approach it the way you do, or, if not, why not? You want to gain some insight into the lawyer and what it will be like working with them so that you can decide if that is a person you want to work with for the next year or more.

There is no right answer to any of these questions, but hopefully the answers help you make a decision on the lawyer you want to represent you as you navigate the difficult, often emotional issues in divorce. And it is why you should always consult with a lawyer before retaining them.

By Jonathan Blinken | Strategies For Wealth, AAML NJ Bronze Sponsor

Getting divorced can be a painful process. For many it can mean starting over. Unfortunately, that may include starting over financially. This can mean different things to different people - if one spouse was the primary breadwinner in a long marriage, they may be ordered to give a significant portion of their retirement plan to their spouse who focused on raising the children. This may cause concern over how they will support themselves in their twilight years. On the flip side, one spouse might have put their career on hold to raise the family and are now having trouble making ends meet, securing a job, and developing or restarting their own career. That’s why, from the moment you know you are getting a divorce, creating a viable financial plan is one of the most important things you can do. Of course, you can develop a plan and budget on your own, but it may be helpful to seek out professional advice from a financial advisor or CPA who specializes in helping people create their own financial plans, particularly in light of an impending divorce. 

Budget Your Way To A Better Future

One of the first things you should do, once you know you are getting divorced, is create a budget with a focus on savings and investment. Remember, without a second income, you should recalculate your needs, and the ability to meet them, and make a reasonable prediction about your monthly cash flow. This may mean a significant change in lifestyle and habits. If you frequently dine at restaurants, you may need to begin to prepare more meals at home. You might need to explore alternative vacations, or a “staycation”, rather than lavish trips. Learning to live within a new set of parameters can be challenging, but it is crucial for your future financial success after a divorce. Create a budget, and stick to it. 

Make sure you are aware of all your debts, and work on paying those down as quickly as feasible, particularly high interest rate credit card debt. Then, whenever possible, pay yourself first! Put as much as you can into a savings account for emergencies. Try to contribute monthly to either a retirement plan or an investment account that has well diversified investments to ensure continued and measured growth consistent with your risk tolerance. One of the easiest ways to accomplish this goal is to commit to automate deposits into savings, investments, a 401(k) or permanent life insurance. This eliminates obstacles or excuses that may present itself – or the temptation to spend on the next big thing or bright, shiny object, such as the latest consumer gadget. Building up a good nest egg and emergency fund is a critical step in creating a financial plan after a divorce.

Records And Reality

Keep detailed and accurate records of your current spending. This will be important as alimony, or spousal support, is considered. In many states, the amount awarded is dependent on numerous factors, including the needs of both the recipient spouse and the ability of the other spouse to pay for it. Depending on your personal situation, think carefully about how best to protect yourself. It is important to recognize both ex-spouses often end up with a lower standard of living, post-divorce, than they had when married.

When the division of real property is at issue, be realistic about what you can afford, and pick your assets carefully. Keeping the marital home is often a goal for one or both of the divorcing parties; however, the debt usually comes with it, and if you cannot feasibly afford the mortgage payments each month, you may need to walk away. Think about your short and long-term needs, and make smart decisions. 

Don’t Make Emotional Decisions

Try not to get caught up in the emotions. One former client was heartbroken when her marriage to her husband of 30 years ended. The husband offered to give her a generous amount of money for several years as spousal support. She put her emotional pain aside, and sat down with a calculator and her advisors. They analyzed several alternative arrangements, and determined the one that best met her future needs.

While she was tempted by the initial offer, she negotiated for one-half of the couple’s rental property portfolio. Although she needed to pay property taxes, mortgages, maintenance, and insurance on the properties, at the end of the day this would earn her more than she would have received in spousal support, and ensured that her earnings were indefinite. You must be prepared to think long-term in your financial planning, which can often mean foregoing your initial emotional impulses.

Be Aware Of The Tax Man

Many of the financial decisions you make during a divorce can have tax implications. It is important to consult your accountant, or a tax attorney, to ensure that you make wise decisions. For example, it is common for one or both parties in a divorce to have significant assets in their qualified retirement plan. If a qualified retirement plan is divided in a divorce, it is important that the parties do not actually withdraw any money before age 59 1/2. Early withdrawal not only incurs penalty fees (usually 10%) but you will also be taxed at your ordinary income rate for the year that you take out the money, leaving you with significantly less than what you may need during retirement.

No Extravagancies During Divorce 

Whatever you do, during a divorce, do not make any major financial purchases. Most states consider anything acquired during the marriage as community property – therefore, you could be forced to repay your spouse for your spending. Additionally, many courts impose injunctions, or orders preventing parties from spending money unnecessarily. 

Another former client purchased a boat for nearly $50,000 during the divorce and attempted to keep it a secret. He thought he could get away with it, until he parked it in front of his house for a week. His wife got suspicious and asked for his bank records, where she found a monthly payment to a well-known boat dealer. That $50,000 boat cost my client an additional $25,000 in assets, because he wanted to fulfill his dreams before he was divorced. Patience is a virtue – wait until the divorce is finalized. 

Play By The Rules

Always follow the court order. If you have been ordered to deliver property or execute documents to convey it, then you need to do so. If you have been ordered to pay attorney’s fees, then you must do so. Failure to follow a court order can have serious financial implications. The court can sentence the offending spouse to jail for contempt of court, which is not only embarrassing and uncomfortable, but could affect your ability to work. Your property may also be subject to a lien, meaning it is now secured by debts you owe to creditors. If you ever need to liquidate your property, the value will be diminished by the liens on top of it. 

Invest In Yourself Post-Divorce

After your divorce is finalized, it is a great time to invest in yourself. You are beginning a new chapter in life. Think about what that means to you, and develop concrete personal and financial goals. For some, it might mean going back to school. For others, it may mean starting a business. Maybe you have always wanted a second home to rent out and increase your income. Whatever it is, find out how much it will cost to invest in you, and determine if it’s worth the money. If it is, come up with a financial plan to start saving and go for it.  

Divorce is hard, no matter how amicable. Setting aside emotions and thinking clearly about your financial future is the most important thing you can do for yourself, and your children. Consult with professionals who are familiar with the financial implications of divorce, develop a financial plan, and have patience in achieving it. You may be starting over, but with planning and persistence you can build a strong financial future. 

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GUEST AUTHOR:

              

Jonathan Blinken

Financial Advisor at: Strategies For Wealth

120 Broadway

37th Floor

New York, NY 10271

Office:   212-249-9200

Mobile: 212-960-3105

Email: Jonathan_blinken@strategiesforwealth.com 

Web Page: www.Blinkenfinancial.com

https://www.linkedin.com/in/jonathanblinken

Jonathan Blinken is a Financial Advisor at Strategies For Wealth. His mission is to educate his clients and empower them to feel more in control of their financial life and decision-making. 

Connect: www.blinkenfinancial.com 

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Strategies for Wealth is not an affiliate or subsidiary of PAS or Guardian. 2017-46539 Exp 9/19

By Our Family Wizard, AAML NJ Bronze Sponsor

What is birdnesting divorce?

When birdnesting after divorce or separation, the children stay in the family home—a safe and cozy nest—and the parents take turns living with them.

When one parent is staying with the kids, the other parent stays at another place, like a rented apartment or a family member’s house. Then they swap, and the other parent stays with the children while the parent who was with the kids before stays somewhere else.

“A short-term nesting plan is incredibly beneficial to children at the initial stages of a divorce or separation,” explains Elle Barr, an experienced family law attorney and a court-appointed guardian ad litem, or child welfare expert and attorney for children, for nearly 20 years.

Read the full blog post here.