AAML NJ Blog

By Lawrence R. Jones and Joni Jones |

April is World #Autism Awareness and Acceptance Month. As part of OurFamilyWizard's support and recognition of April as World Autism Awareness Month, the Hon. Lawrence R. Jones (Ret.) and Joni Jones share invaluable #advice and #insights on co-parenting a child with autism.

Custody, Parenting Time, and Issues Involving Children with Autism
By: Lawrence R. Jones and Joni Jones
On March 23, 2023, the U.S. Government’s Center of Disease Control and Prevention (CDC) issued a new report with a finding that 1 in every 36 eight-year-old children in the United States is diagnosed with autism spectrum disorder (ASD).[1] This analysis underscores the reality that in family practice, there is a growing number of circumstances where parties who are separating or divorcing may have a child with autism.

Read the full post here: https://www.ourfamilywizard.com/knowledge-center/regional-resources/united-states/new-jersey/custody-parenting-time-and-issues-children-autism

By LEAP Legal Software, AAML NJ Silver Sponsor

The present economic uncertainty means many businesses are finding ways to tighten their resources to minimize and avoid any negative impacts of potential economic downturn. The legal industry is no different. As many New Jersey family law firms do not have the same resources as large corporations, they need to find new ways to be creative in minimizing spend, reducing overhead, and optimizing the resources they have to protect their business from any economic challenges. While it may seem too early to take action in such uncertainty, New Jersey law firm owners and partners can start taking action to prepare for whatever the future has in store.

Automate Workflows to Increase Billing

Manual operations lead to New Jersey family law firms missing out on thousands of dollars in revenue every single week. Alarmingly, a recent study found that 43% of law firm fee earners spend more than 35% of their time working on non-billable tasks. If fee earners continue to focus so much of their time on redundant, manual work, law firms will struggle to maintain profitable and successful operations during economic downturn. Manual workflows that often take up the time of New Jersey matrimonial attorneys include case updates, time tracking, and collaboration.

Legal automation supported by the right legal software can digitize law firm tasks that take up countless hours and allows them to focus on billable work during standard business hours instead of working longer hours to compensate for this lost time. Additionally, as New Jersey attorneys work faster, they can take on more cases in the same amount of time to create additional revenue that supports the law firm’s overall financial health. Workflow automation to look for in a software solution include:

• Matter creation and management
• Email and correspondence
• Document creation and management
• Time tracking
• Billing and invoicing

Establish Hybrid and Remote Work Options

Maintaining an adequate office space with all the resources for staff members and enough room for client meetings is a considerable expense for New Jersey law firms. The cost to rent a space, pay utilities, and provide adequate in-office facilities creates high overhead costs that impact where law firms could invest the revenue they earn. Therefore, hybrid and remote work options present an easy way for New Jersey family law firms to combat this.

When law firms obtain smaller office space, they reduce monthly spending to cushion their operation expenses. Additionally, they can reinvest the money they save into their marketing efforts to establish new business opportunities that ultimately further protect the firm from financial struggles.

There are additional benefits to implementing hybrid and remote work options. Over the past several years, many New Jersey legal professionals already expect to have remote work options and actively seek job opportunities that offer flexibility. This shift means that New Jersey family law firms can reduce their operating costs and help ensure they maintain their current people resources and improve staff retention.

Develop New Revenue Streams

As law firms increase their staff’s flexibility, they also open up new business opportunities in jurisdictions and areas of law they previously could not service. For example, when New Jersey family law firms expand their recruitment efforts, they can bring on the top lawyers across several jurisdictions and practice specialties that instantly create additional revenue streams without worrying about needing a bigger office space and incurring additional expenses for commuter benefits.

This can only be achieved with the right legal software. All staff members need access to real-time case information to view and provide updates, collaborate internally and externally, and track the time spent on the work they’ve done for accurate billing and invoicing, regardless of if that work got done in an office, at court, or on the go. Cloud-based software provides New Jersey matrimonial attorneys the accessibility and security needed to establish additional revenue streams without increasing their current resources.

Create a Culture of Transparency

Ultimately, the best thing New Jersey family law firms can do for their staff members is to have open dialogue and transparency. The prospect of financial uncertainty or any cultural shifts can be daunting for any employee, so senior attorneys and partners in the practice need to provide adequate support for the junior and support staff under them. Regular firm meetings and one-on-one check-ins where staff can discuss concerns, potential changes, develop a career plan, and set individual and group expectations help mitigate staff uncertainty.

Senior practice members can have more time to dedicate to these check-ins when software automates the manual administrative tasks that previously consumed their days. In addition, as they continue to work with all staff members, it showcases the firm’s commitment to developing a transparent and supportive culture without asking senior attorneys to make up this time by working after business hours.

Conclusion

While there is still debate over how far off economic slowdown can be, there is never a bad time to review law firm operations and find ways to improve operational and overhead expenses and efficiency. New Jersey family law firms that attempt to make these shifts while maintaining manual processes will find it more difficult than firms that have moved their cloud operations to eliminate inefficiencies, reduce spending, and establish new revenue streams for enhanced cash flow. The LEAP legal practice productivity solution is the only fully-integrated, cloud-based solution that provides New Jersey matrimonial attorneys with everything they need to run a productive and profitable business from anywhere, at any time. Schedule a demo today to see how LEAP can help optimize your firm’s operations.

By Christine Fitzgerald Esq. | Seiden Family Law

Family Court, litigation, judges, attorneys, and judgments. These words can be intimidating for someone who has never been through the court system, and even for some who have. As a layperson, you are not expected to know what to expect when going to Family Court in New Jersey. That's why it's important to hire an experienced family law attorney who can guide you through the process and take away some of the mystery.

If you're a litigant, here's what you can expect when going to court:

Waiting

New Jersey is facing an unprecedented and catastrophic judicial vacancy crisis. As a result, litigants and attorneys may wait to see the judge long past the original scheduled time, regardless of whether the proceedings are virtual or in person.

The Speech

Judges often suggest that litigants consider resolving their matter to save time, money, and stress, and to spare their children lengthy litigation. This usually involves a statement about parents being able to be in the same photo at the child’s graduation, wedding, baby shower, etc.

Settlement

Your attorneys may have time to talk settlement while you wait for the Judge. The more issues you settle, the easier it becomes to settle the bigger, tougher issues.

In Chambers Conference: Judges may conference with the attorneys in chambers. This can be insightful into how the Judge is thinking about your case before you are on the record.

Being Sworn In

When the Judge calls your case, you and your attorney will sit at counsel table and be administered the oath. You should expect to be sworn to tell the truth, but most of the questions will be directed at your attorney.

Decisions

You may leave court without knowing what the Judge is going to Order or what the decision will be.

Dirty Laundry

You may be appearing and having your case heard in front of a room full of people, and whatever issues are being addressed will be for public consumption unless it is a confidential matter.

Mystery

Even when your attorney knows the Judge well, there is no way to guarantee what a Judge will decide on any given day. The only way to eliminate the unknown is to settle your case and take ownership of the decisions being made.

Navigating a family law matter is stressful and confusing at times, but an experienced family law attorney should provide you with the tools necessary to have some expectations of what might happen in your case and options for resolutions.

By LEAP Legal Software | AAML NJ Silver Sponsor

New Jersey family law firms face an unprecedented challenge with the current legal skills shortage. 60% of surveyed law firms report already feeling a strain on their operations due to a lack of skilled workers, according to TheLawyer.com. One of the driving factors in this skills shortage is a competitive hiring market that empowers skilled employees to identify the firm that will offer them the most flexibility and the tools they need to be successful. While it may feel daunting for partners and legal hiring managers to find ways to remain competitive in retaining and hiring skilled legal staff, the good news is that the right legal software can help them complete four simple tasks to stay ahead of their competition.

1. Automate “On-Location” Manual Processes

Nearly every industry has seen the notion of 50-hour, in-office workweeks due to manual processes become antiquated, and the legal industry is no exception. Legal professionals have requests and responses that come in outside of traditional office hours because their clients are often working at that time. That previously meant that legal secretaries and attorneys had to come in early or stay late in the office to create new matters, schedule meetings, or respond with updates to ensure that clients did not experience delays. However, legal technology can now automate these processes, giving staff members back their personal time without jeopardizing client experience.

One example of this is new matter creation. Instead of manually setting up a manila or desktop folder, the right legal software offers pre-built matter types for the most common cases a firm handles. This feature means that client and case-related data only needs to be entered once and then can be auto-populated across relevant documents and forms, eliminating the time spent on manually completing documents for each case. All staff members working on the case can then also access the data from anywhere to contact clients, set up meetings, request additional information, and provide updates. In addition, as staff free up time previously spent on manual case management, they can focus more attention on billable client work during the day to get them home on time and establish a healthy work-life balance.

2. Implement Flexible Work Options

In 2022, nearly 50% of legal hiring managers reported that a strong candidate would reject a job offer if they didn’t have remote work opportunities. If firms can’t offer their staff members the option of where and when it is convenient for them, they could lose top talent to more modern firms solely because they need the flexibility to manage their professional and personal obligations.

Legal cloud software can eliminate this challenge altogether. When New Jersey legal professionals can access software to see all the details, updates, documents, and correspondence related to the cases they’re working on from anywhere, they can effectively work from anywhere, at any time, whether in the office, at home, in between school drop-offs, in between doctors appointments, and even from a completely different geographical location! Remote work options also benefit New Jersey family law firms by reducing overhead as they reduce the amount of office space, desks, and utilities required to accommodate their staff in person.

3. Train and Mentor Junior Attorneys

New Jersey matrimonial attorneys at the early stages of their careers face a Catch-22. Although technology can automate many of the tedious tasks they previously handled, legal automation tools can also allow them to grow their technical skills and develop career plans that align with their professional goals. Partners at New Jersey family law firms must work with their junior staff to understand how they want to grow and develop a career plan with key milestones to achieve those outcomes. In the past, senior attorneys did not have the time to dedicate to mentoring and training new staff members. However, legal software can eliminate several hours of manual work a week to allow senior attorneys to serve as mentors to junior attorneys.

For example, as senior lawyers spend more time servicing clients through billable work, they can include junior lawyers through virtual meetings or shadowing so they can begin to develop the business acumen, emotional intelligence, and project management skills needed to advance their careers and move into client-facing roles. Training opportunities allow law firms to support their staff’s career development and demonstrate their investment in retaining their employees by creating an environment enabling them to learn and advance from within.

4. Expand Recruitment Efforts

The last way law firms can mitigate employment gaps is by expanding their recruitment efforts beyond their local New Jersey communities. While New Jersey law firms once had the advantage of being in a concentrated hub for top legal talent at all career stages, many legal professionals have already taken advantage of the increased presence of legal software to work remotely. Historically, “main street” law firms could not recruit or retain staff outside their communities, but legal software has now made these possibilities a reality.

Cloud-based legal software enables partners to reconnect with senior attorneys that retired or moved away to serve as senior team members and provide consulting services by providing them access to case-related information from anywhere, on any device. Additionally, as New Jersey family law firms onboard staff members in different locations, they can generate new revenue by servicing jurisdictions and areas of law that were previously outside of their capabilities.

Conclusion

The competition for highly skilled legal staff is more intense than ever, and the legal skills shortage will only continue to pose challenges for law firms that cannot offer the flexibility, automation, and advancement opportunities that New Jersey legal professionals need when they consider staying with a practice or joining a more modern law firm. As firm owners and partners consider how they create a modern work environment, it is time they consider implementing cloud-based legal software to automate the mundane, in-person tasks that force staff members to work longer, limit their flexibility, and impact staff retention and hiring.

Download LEAP's whitepaper, How to Overcome the Skills Shortage, for an in-depth look at identifying these gaps in your New Jersey law firm and mitigating the impacts with the right legal software solution.

By Elle Barr, Attorney, GAL, Judicial Education Coordinator | Our Family Wizard, AAML NJ Bronze Sponsor

For co-parents with 50/50 physical custody, alternating weeks is the simplest parenting schedule available. When following this arrangement, children spend one week with one parent and then one week with the other. This can simplify the scheduling of changeovers immensely.

As with all parenting schedules, however, it's not without its drawbacks. To help you decide whether alternating weeks is a good fit for your family, here are some of the major benefits and disadvantages of this parenting schedule.

What Is a 7/7 Custody Schedule?

Under a 7/7 parenting schedule, co-parents share physical custody equally in seven-day intervals. Children will spend one week with one parent and the next week with the other. This streamlined schedule minimizes transitions but also increases time apart.

More co-parents embrace joint parenting time, in which they split joint physical custody into different proportions and intervals. Various forms of the 50/50 custody schedule, where co-parents share custody equally, continue to grow in popularity.

The benefits of equal time with each co-parent can be significant. Many child development and legal experts agree that frequent, meaningful contact with both parents can positively affect children for the rest of their lives. However, even for agreeable co-parents with a healthy, cooperative relationship, any custody schedule demands effective communication and a willingness to compromise. The 7/7, or alternating week schedule, provides the easiest way to split time 50/50.

You’ll often see the week-on/week-off or alternating weeks schedule rotation referred to as a “custody schedule” or a “parenting schedule.”

In general, the term “custody” can refer to either the legal or physical custody of a child or children. Physical custody refers to where children live, and legal custody explains the power of each parent to make major decisions for their children.

Today, many experts use terms like “parenting schedule” or “parenting time arrangement” when speaking about where children live in place of “custody schedule.” These new terms better represent a relationship and the parent’s responsibilities for their children. This article will use these terms interchangeably.

Key Takeaways

Read the full blog post HERE.

By Rebecca Kuderka | Withum, AAML NJ Gold Sponsor

When litigating a divorce case, one important item to consider is alimony. There is no set formula that can be used to calculate alimony and there are various types of alimony. The purpose of alimony is to allow both parties to maintain their lifestyle after the divorce. To understand the full alimony picture, it is important to be aware of the different types of alimony and the factors that are considered when determining alimony. 

Types of Alimony

In the time between the filing of the complaint and the judgment of divorce, the Court can order Pendente lite support, also known as temporary support. This support can be agreed upon by the parties or ordered by the court if necessary. This support does not continue after the divorce is finalized but may be replaced by the other types of alimony. 

After the final judgment of divorce, the court can order, or the parties can agree on four types of alimony:  Open Duration, Limited Duration, Rehabilitation, and Reimbursement.

Similar to the traditional Permanent Alimony, Open Duration Alimony has no set time limit.  Normally the payments continue until either there is a change in circumstances, i.e., the supporting party has a loss in income, or there is a termination of the alimony payments such as when the supported spouse remarries. Open Duration alimony will usually be considered for individuals married for 20 years or longer. 

The second category, Limited Duration Alimony is typically considered for those married less than 20 years. With this type of alimony, the payments will not typically exceed the length of the marriage, unless there are exceptional circumstances such as the level of a former spouse’s financial dependence or the poor health of the dependent spouse. 

Despite the name that seems health-related, the third category, Rehabilitation Alimony is considered when a dependent spouse is completing additional education or training needed to re-enter the workforce. This type of alimony is typically a short-term obligation and requires a detailed rehabilitation plan which should detail the requirements for the dependent spouse to complete the education/ training needed to achieve financial independence.

Finally, there is Reimbursement Alimony.  This form of alimony is designed to re-pay an individual who made financial contributions to the education or career development of their spouse. The reimbursement alimony could include the payments that went towards tuition, cost of living (for the student spouse), and/or other costs to obtain the degree or professional training.  

Factors Considered 

There is no set formula to determine the amount of alimony payments; however, the New Jersey Statute, NJSA 34 N.J.S.2A:34-23, sets forth factors that are considered when making this determination. 

Negotiations

It is best to be realistic when negotiating alimony. The best way to do this is to start with an accurate understanding of the parties’ finances. Be sure to identify all sources of income, including salaries, dividends, bonuses, business income, etc. If you are unsure that all income is reported, consider retaining a forensic accountant to investigate the spouse’s income.  This will enable you to determine their ability to pay. Finally, but equally as important, document your client’s expenses. This will allow you to establish the financial need for alimony. This financial need along with the ability to pay will ultimately be the basis of your negotiations to get your client the alimony he or she needs to maintain their lifestyle after the divorce.

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

Life after divorce can be liberating – but it can also be scary. And for couples who divorce and still need to raise children together, there is so much that may be out of your sole control for a long time. What you can control, however, is your personal financial health after divorce. Divorce can be financially devastating, often leaving people with merely half of what they’ve saved over their lives, and in many cases, forced to start over. Take heart in knowing that with knowledge and time, you can rebuild your wealth, if you are proactive and savvy. Below are 5 basic yet critically important steps you can take to get your finances in order after your divorce. 

1. Take Inventory

You will not know what you need to do if you do not first know where you are. List out all your assets and your debts, as well as your monthly incomings and outgoings. Note who your biggest creditors are and make a list of people who may owe you money. There are plenty of templates online to help you organize, and it is helpful to keep a small notebook or binder with bank statements, monthly bills, and correspondence with creditors so all your financial information is one place. Finally, check your credit score. You are entitled to a free annual check from various companies. Always use a reliable source that uses the FICO system. Monitoring your credit score can impact your future ability to invest and take out loans. Keep your scores in your binder.

2. Make a Budget

Now that you've gotten everything organized and you can see a snapshot of your financial health, make a budget. It is okay if you realize right after the divorce that your monthly expenses exceed your income. Do not beat yourself up about it – take action instead. Take a critical look at where you can cut back. Eat at home more often. Take up jogging outdoors or work out from home using YouTube videos instead of  paying for a gym membership. If any of your contracts with utilities are about to expire, shop around for the best deal. See if you can switch car insurers. If you're having a hard time figuring out where you can save, then get help from a financial planner to guide you. Once you've got a good idea of your budget, build in small, achievable goals. It will help you to save and work towards a goal, which will build your confidence when you've achieved it. Things, like paying off a credit card, or saving up for a short trip with your best friend, are all great things to focus on when rebuilding your finances.

3. Get Professional Advice

Of course, getting a financial planner might be a key step for you to take. But on top of that information, get advice wherever else you can. Seek out tax experts. Speak to the HR or pension source at your company to examine your retirement options. Take this information to a third party retirement expert who can give you objective advice. Consider hiring a company to invest in mutual funds on your behalf. The more support you have, the better and more confident you’ll feel – but this advice comes with a caveat. At the end of the day, it is YOUR money. If the experts you have hired do not take the time to speak with you, or explain what they are doing with your money, then move on. There are hundreds of companies that offer financial services. Find someone you trust. 

4. Protect

Look into getting adequate life insurance, if you do not already have it. If you can afford it, whole life insurance policies are ideal; however, getting term life insurance is still a good option if your budget does not allow for a whole life policy. If you do have life insurance, then make sure you change the beneficiary if your spouse was previously listed as beneficiary, unless language in your divorce order prevents you from doing so. 

Umbrella insurance is another good option – it is basically extra liability insurance and will cover any claims that exceed the limits of your homeowner's and auto insurance policies. This will kick in if your underlying policies are exhausted. Disability insurance is something else you should get, particularly because you will be relying solely on your own paycheck for the time being. Talk to your boss to see if the company offers disability insurance for a low price that can be deducted from your paycheck automatically each pay period.

Build up a good savings cushion for emergencies- most experts advise saving up to 6 months of living expenses in cash. Start with twenty percent of your earnings. This might sound like a lot, but remember it will only be for a short period of time. Finally, check to see if important legal documents, such as; your Will, Health Care Proxy or Durable Power of Attorney need to be amended. If, in your Will you left anything to your spouse, make sure you consult an attorney specializing in Wills to help you change this to someone else you trust, or perhaps draft an entirely new Will. If you did not have any of these documents, now is a good time to get all your paperwork in order, particularly if you have children. 

5. Invest

Interpret this broadly. You can invest in yourself. Look into earning new qualifications or a higher education to build higher earning power through the years. Invest in the stock market. This is certainly one of the quickest ways to build your fortune, but it is not without risk. Take a course on basic advice, or hire an expert to guide you (or invest on your behalf). The takeaway here is, once you have the ability to do so, invest, period. Perhaps you received some liquidity from the divorce. Look into buying a property to rent out for a few years and build up a steady side income. Understand that with investment always comes risk. When in doubt, go back to step 3 and get as much advice as you can before you put your money into an investment. 

Be realistic every step of the way. Understand that rebuilding your finances after a divorce takes time. Don’t invest in anything too risky. Remember that if it seems too good to be true, it probably is. A financial planner can help you come up with realistic goals and craft a realistic budget if you feel overwhelmed. And finally, take your financial health seriously, much like your own health. Monitor it regularly, and go see a professional for an annual ‘check-up.’ 

For trusted, professional advice on any of these steps after a divorce, contact Strategies for Wealth at 212-249-9200.

By LEAP US, AAML NJ Silver Sponsor

Over the past year alone, we have seen numerous cases where outdated software created numerous complications that cost valuable time and resources that can’t afford to be lost. From the Southwest Airlines shutdowns to the California State Bar Association data breach, it has never been more important to reassess your law firm’s tech stack and identify any red flags that could impact your firm. This article will review the four signs New Jersey family law firms should look for that indicate it’s time to move to a legal practice productivity solution.

1. On-premises Hardware

Between court appearances and client meetings, New Jersey matrimonial attorneys complete hundreds of hours of work outside the office. If a firm uses a software solution that requires users to be in the office, this immediately delays updates, causes collaboration gaps, and missed billable hours. Additionally, on-premises hardware adds extra expenses, including dedicated IT employees or consultants, faulty component and hardware replacement, electricity and utility bills, and ongoing updates. These challenges mean that law firms cannot establish efficient, profitable, and scalable operations, limiting their staff’s flexibility.

Outside of that, on-premises hardware leaves firms vulnerable to multiple security threats. In 2021 alone, 25% of law firms reported that their firms experienced a data breach. The average practice cannot dedicate resources just for security, meaning client data can be compromised in break-ins, hacks, and natural disasters. This compromises a firm’s ability to continue working if a major event leaves them vulnerable to malpractice risks, which can lead to potential disbarment.

2. Limited Features & Integrations

Another red flag is if the software does not offer a comprehensive, all-in-one solution. When technology only caters to one business function, it creates a siloed tech stack that becomes unmanageable and creates more challenges than if it operated manually. A New Jersey family law firm should be able to communicate seamlessly to eliminate gaps in transparency, next steps, and collaboration with staff members, clients, and third parties. These gaps impact how quickly work can get done, data integrity, and employee and client satisfaction.

Outside of the software’s native features, integrations are essential for successful software implementation. Integrations with leading legal and business solutions specializing in specific business needs support the software’s foundational features and simplify the implementation without disrupting everyday processes. If critical integrations (for example, LawConnect, LawToolBox, and Microsoft 365, to name a few) are unavailable, it causes law firms to invest in numerous software solutions that create an overwhelming tech stack and leads to data gaps and errors due to double data entry and clerical errors.

3. Limited Paid Support

A third red flag is if the provider requires them to pay for ongoing support post-implementation without providing comprehensive support tools. Particularly in the initial training phase, New Jersey matrimonial attorneys must have access to the training resources that will give them the foundation for success and are accessible in a way that works best for their learning style and schedule. Users should have access to a dedicated success manager, online live chat, on-demand videos, and how-to articles without breaking the bank. This support should also not be limited to user experience and should eliminate the need for manual, time-consuming, and expensive software updates and backups.

Additionally, the support should remain easily accessible and affordable throughout a law firm’s entire interaction with a software provider. From new feature releases, newly onboarded staff, and existing users looking for a refresher, ongoing support is essential to ensure that the software is used effectively to establish streamlined processes that eliminate the challenges that led to the software investment in the first place.

4. Complex Transition Process

Last but certainly not least is reviewing the transition process. A seamless transition is the key to a successful software transition or installation. If the transition process takes up a ton of critical time, requires extensive downtime, and creates more manual work, it will make it even more difficult for New Jersey matrimonial attorneys and their support staff to start using a new solution. If the implementation requires months of disrupted work, manual data transitions, and countless hours dedicated to implementation, the software could cost more than its worth in thousands of dollars in missed billable work.

Firms should also avoid software with several limitations on the data types that can be migrated into the system. For example, law firms should be able to transition all of their historical matters, correspondence, and accounting data seamlessly. Losing out on that data can create issues for clients on retainer, make it difficult to run conflict of interest checks, and create more work to find relevant information for open matters during the transition process.

What Makes a Legal Practice Productivity Solution Different?

If your current software provider, or a software provider you’re considering, has any of these red flags—or worse, all of them—then it’s time to consider switching to a legal practice productivity solution. LEAP is the only legal practice productivity solution designed to provide everything a New Jersey family law firm needs to be productive and profitable in 2023 and beyond. Here are a few reasons why over 61,000 legal professionals have already made the switch to LEAP:

Conclusion

There is no better time for New Jersey law firms to determine if their current software investments have the solutions needed for their firms to establish sustainable business processes. If firms identify any red flags hidden in their IT infrastructures, the LEAP legal practice productivity solution provides law firms with everything they need to run a family law firm in the cloud with an all-in-one solution that improves productivity, profitability, and employee and client experiences.

See how LEAP can improve operations and reduce overhead for your New Jersey family law firm today.

By Kriste Rodriguez, Director | EisnerAmper, AAML NJ Bronze Sponsor

Overview of the Marital Balance Sheet

One of the tasks as a forensic accountant is to prepare a marital balance sheet to help facilitate the division of the marital assets/liabilities. The assets and liabilities of the marital balance sheet may include, but are not limited to:

The value of certain assets listed above, such as real estate, pensions, jewelry, and wine collections, are determined by appraisers that specialize in these areas. Kelly Blue Book or similar services are often used to determine the value for automobiles, boats, etc. Account statements are reviewed by the forensic accountant to determine the value of assets, such as bank, brokerage and retirement accounts. Forensic accountants are tasked with determining the value of an interest in businesses to help attorneys determine the parties share of the business value for equitable distribution.

Failure to Consider Tax Implications Could Result in Inequitable Division of Assets

Certain assets may appear to be equal in value on the surface. However, certain events could trigger tax consequences, which could result in very different values.

Take, for example, the marital residence. There is no issue if the parties agree to sell the marital home and split the proceeds. However, if one of the parties remains in the house and subsequently sells the home, the tax consequences, specifically capital gains tax (if any), could impact the value to that person after it is sold.

The assets in a brokerage account portfolio may not really be equal in value. A brokerage account with cash of $100,000 does not have the same value as a brokerage account with $100,000 of stock on an after-tax basis. Once the tax implications are considered on stock when it is sold, the values become very different. The gain on the sale of stock is the difference between the cost basis and the sale price. This gain will be either subject to long-term or short-term capital gains, resulting in an after-tax value less than $100,000. Similarly, if the parties have two brokerage accounts each with $100,000 of stock in the portfolio, the cost basis for each of those accounts could be very different, resulting in more or less taxes. The tax consequences should be considered so that the asset is equitably distributed.

Retirement Account Division – Understanding the Rules

The division of retirement assets, such as 401(k)s should be carefully considered. Not only are tax implications involved, but specific rules also apply to the transfer of certain retirement assets. Failure to comply with these rules could result in unintended consequences. For example, if one party is entitled to a portion of a 401(k)the money should not be withdrawn and transferred to the other party without executing the proper paperwork. Failure to do so could result in early withdrawal penalties and incomer tax consequences. A document known as a qualified domestic relations order or QDRO should be drafted, which specifies how the spouse will receive their portion of the 401(k) without triggering any income tax or early withdrawal penalties. Eligible withdrawals from a 401(k) will be taxed at ordinary income tax rates and should also be considered when dividing this asset during settlement. The use of a forensic accountant with income tax experience can help you avoid the pitfall that can be encountered with 401(k) distributions.

Liquidity of Assets

The liquidity of an asset or the ability to turn the asset into cash is very important to consider when dividing up the marital estate. Cash in a savings or checking account is the most liquid asset. However, assets such as homes, wine collections and/or art collections are less liquid because it takes time to sell this type of asset. It is not practical for one spouse to receive mostly liquid assets and the other to receive primarily illiquid assets. Significant cash flow problems could result for the person receiving the mostly illiquid asset portfolio. One of the parties may keep the marital residence, in exchange for fewer liquid assets. It is imperative, specifically when there is a lack of liquid assets to be received in settlement, that a proper budget is considered to cover the expense of maintaining the home and other lifestyle expenses.

Life Insurance Policies

It is common in marital settlement agreements (MSA) for one of the parties to maintain a life insurance policy to cover their alimony and/or child support obligation should that party become deceased before their support obligation is over. The spouse that the insurance is obtained for should either be the owner or irrevocable beneficiary. This will ensure that the beneficiary will be notified if the premiums are not being paid or if there are any other issues with the policy. Failure to control the policy could result in a lapse or cancellation of the policy. As an alternative, the spouse that is maintaining the policy should provide proof of the policies on an agreed-upon time frame, whether quarterly, semi-annually or annually.

Conclusion

Any one of these common areas discussed above in a marital settlement agreement could cause significant financial loss and/or future financial distress if not addressed properly at settlement. Therefore, it is imperative to analyze the assets and consider all financial/tax consequences that each asset may have so that the division of the marital estate is fair and equitable.

Originally published on January 2, 2023.

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

Co-parenting works differently for different families. It’s important to select a parenting schedule that aligns with your children’s needs to ease the transition for them and for you. Read more to see if the popular 2-2-3 custody schedule will work for your family.

What Is a 2-2-3 Custody Schedule?

A 2-2-3 custody schedule is a co-parenting schedule where each parent has equal time with their child. Parents split alternating sets of days over a two week period. The 2-2-3 schedule offers kids frequent time with both parents but could present logistical challenges.

2-2-3 is a common schedule rotation used by parents with joint physical custody, an agreement in which a child spends a lot of time with each parent. The 2-2-3 schedule, however, is an option that works specifically for co-parents who share time with their children on an equal, 50/50 basis.

You’ll often see the 2-2-3 schedule rotation referred to as a “custody schedule” or a “parenting schedule.”

50/50 parenting time rotations, like 2-2-3, work for some families and not for others. But a 2019 review published in the Journal of Family Sciences found that 50/50 arrangements could lead to positive outcomes for children. Still, they advised that blanket recommendations are inappropriate because every family’s situation differs.

Before selecting a routine, you should consider your children’s schedule, your relationship with your co-parent, and your child’s age. The 2-2-3 schedule can be logistically complicated, but a digital co-parenting calendar can automatically schedule the rotation to help keep you on track.

Michelle Dempsey-Multack, Certified Divorce and Co-Parenting Specialist summarizes the schedule nicely: “Although a 2-2-3 schedule doesn’t make sense for all families, it is a great option for co-parents whose work schedules allow for it, who have the ability to share in the parenting responsibilities equally, and who live near the other parent.”

“This schedule is especially helpful for children under the age of 4, who are adjusting to co-parenting and may have a harder time separating from one or both parents,” says Dempsey-Multack.

Key Takeaways

Read the full blog post HERE.