There is so much to think about when you are getting divorced.  Many of those thoughts are emotional, while others are financial.  When you are going through the financial checklist, remember to zealously guard your credit rating during this most trying period of your life.

Even if you were a stay at home parent during some of your marriage, you will have a credit rating.  Keeping it clean, accurate and up to date is something you should do the moment you realize you will have to make your way without your spouse.  A good credit rating is paramount when you want to get a mortgage, get lower credit card rates, and establish other lines of credit.  Even getting insurance can be affected by a poor credit rating.  Increasingly, potential employers will also check on your credit rating when deciding whether to hire you.  So it’s hard to overvalue a good credit rating.

So many people fall into a trap during and after a divorce.  Maxing out credit cards, paying the mortgage a little late, all those things diminish your credit rating and can come back and bite you later.  So make plans from the outset.  See your lawyer, set up a meeting with your accountant.  Follow through on the game plan you develop. Things you can do to start include:

·      Fixing the spending limit on all jointly held credit cards (outright canceling joint credit cards may be a mistake).

·      Safeguard all jointly owned bank accounts.

·      Make an accurate record of all marital property.

·      Get a copy of your last known credit rating and correct anything that may be wrong on the report.

If you plan well, know your options and follow through, at least this part of your divorce can go smoothly and predictably. 

September 29th 2008 Posted to Finances
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Okay, let’s say you’ve gotten your divorce, everything is as close to normal as you imagined and you’ve moved on.  The kids are relatively happy; you’ve been dating for a while and actually found someone special and decided to remarry.  Everything will be different with your new spouse because you have learned your lessons, right?  Not so fast. 

National studies have shown that second marriages fail at a higher rate than first marriages – 60% versus 50%.  At first glance the number looks surprising. But if you dig beneath the surface it is not really all that shocking. 

Why not?  Human nature.  The old adage that lightning doesn’t strike twice turns out not to be true.  There are actually people who are human lightning rods and have been zapped time and again.  I don’t want to compare marriage to lightning, but the point is: Don’t assume that all you need to do is find someone new and different than your first spouse, and you will have the storybook ending you always thought was your birthright. 

Nobody should look at these stats and conclude they are destined to be divorced twice, but the reasons second marriages fail are strikingly similar to first divorces.  The same issues that roiled in your first marriage can rear up in the second.

What can you do to tip the odds in your favor? Plenty, and here are some tips: 

- Check and make sure that you and your intended new spouse are on the same page about money, interests, religion, disciplining children, sex and household chores.

- Be clear to yourself why your first marriage ended. Have you worked out those issues so they won’t roar back in your second marriage?

- Don’t rush into anything until you are pretty certain this person is right for you and not just filling a need.

- Talk about your fears, concerns and questions with the person you want to marry.

Most of the issues raised above fall under the same general heading.  That is COMMUNICATION.  If you properly communicate with yourself and with the man or woman you have decided to marry, many of the pitfalls can be avoided.

Marriage can be sweeter the second time around.  So by all means fall in love.  And talk . . . a lot.

(By the way, don’t even think of tying the knot again without a pre-nup.  A pre-nup is so essential that we call them “Smart-Nups.”  For all the reasons why, see our post on July 16, 2008, entitled Why Divorce is So Expensive (and How a “Smart-Nup” Can Help).)

September 28th 2008 Posted to General
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While watching the news and seeing all the investment banks going bankrupt or losing billions of dollars in value, my mind turned to my business and how people were going to react when they saw their potential nest eggs shrink in the wake of the deepening financial crisis.

In divorce, the equitable division of assets is often rife with emotional issues.  So let’s take a deep breath and think about a potential asset that you can protect and is almost litigation-proof: your inheritance.

But, like anything else of a financial nature, forethought and planning are essential.  One misstep, and that which on the surface would appear to be your separate property, clear and simple, instead reverts into a muddled mass of marital property that could cause untold headaches when separating assets. 

If your parent were to leave you an inheritance, you would do best to take that money and place it in a separate account apart from your joint funds. Under the law, that money belongs solely to you and in divorce will be considered your separate property.

But if you decide to place the money in a joint account (so-called “comingling”), or use some or all of it to remodel your house, or to go on a family vacation (so-called “transmutation”), for example, it becomes problematic whether or not that money would revert to you if you end up divorcing your spouse.

Another thing to think about is whether both parties paid taxes on that inheritance.  If that is the case, the spouse who did not receive the inheritance might be entitled to a credit for a portion of the taxes paid.  That is a question to ask your lawyer.  

Rather than have to deal with this issue, the best thing to do would be to keep any inheritance separate and apart from marital assets from the beginning.  There are enough issues to deal with in divorce.  This needn’t be one of them.

September 25th 2008 Posted to Finances
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For over 40 years lawmakers, lawyers, women’s right advocates and others in New York State have debated whether New York, like virtually all other 49 states in the Union, should have no-fault divorce.

No-fault divorce has been defined as “a divorce in which it doesn’t matter who did what to whom that caused the marriage to break down; all that matters is that there is no reasonable prospect of reconciliation.”

That sounds reasonable enough and theoretically removes much of the animus that permeates many divorce cases that come into our matrimonial and family law practice.  On the surface, that explains why almost every state has adopted no-fault legislation.  But, let’s remember, even with no-fault divorce, all the other sticking points remain to be hammered out between the parties, such as equitable distribution, child support, custody and visitation and alimony.

In general terms, in New York the grounds for divorce are “cruel and inhuman” treatment; adultery; abandonment for one year, having spent at least three years in prison; or having lived pursuant to a separation agreement for one year.  Most of these grounds for divorce have a highly charged inherent emotional component.  That is one of the reasons our firm likes to offer mediation and collaborative law as an alternative to a nasty divorce trial.

A recent study by the University of Pennsylvania revealed a drop in domestic violence of 33% in no-fault divorces – a powerful statistic indeed.  But, unfortunately, that’s not the end of the debate.  The influential New York State office of the National Organization for Women has staunchly opposed legislation for no-fault divorce under the rubric that women still in large earn less than men, and that men would unfairly benefit from no-fault divorces.

In its recent report, the Matrimonial Commission established by the Chief Judge of New York State found that New York’s fault-based divorce system has a direct impact on the manner in which, and the speed with which, matrimonial matters proceed.   Substantial evidence, derived from the public hearings held by the Commission and the professional experience of the Commission members, lead the Commission to conclude that fault allegations and fault trials add significantly to the cost, delay, and trauma of matrimonial litigation and are, in many cases, used by litigants to achieve a tactical advantage in matrimonial litigation.  The Commission urged the New York State Legislature to enact an amendment to the Domestic Relations Law providing for no-fault divorce.

The Matrimonial Commission published its findings in early 2006, and so far the Legislature has not acted to change the divorce laws here in New York.  If the Legislature does pass a new law, I will certainly write something about it.  So check the blog regularly for news and analysis on this and other topics of interest. 

September 21st 2008 Posted to Miscellaneous
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I was watching the news this week as the McGreevey divorce splashed across the screen again.  This case will be fodder for the gossip columnists for years.  An angry wife, humiliated that her husband, the governor of New Jersey, was having an affair….with a man.  Dina Matos, ex-wife of Thomas McGreevey, dropped fraud charges stemming from her belief that she was marrying a heterosexual man who knew that in fact he was not.  The charge was dropped in the wake of the judge’s recent ruling dissolving their marriage.

We’ve all glanced at the papers, seen the television reports, and wondered how anyone would feel if the whole of their lives and persona were open to the public, and how we would feel with them if that were the case.

But I am a lawyer, and I was struck by how much of this could have been avoided if both parties agreed to mediate or collaborate rather than raise all the acrimony kicked up by a full-fledged court battle.

One of the pillars of many family law practices today – including our own – is mediation and collaborative divorce.  All the elements in any litigated divorce can be part of the mediation or collaborative process: child support, custody and visitation, alimony, and equitable distribution.

The McGreevey matter seemed to hinge as much on the issue of Dina Matos’ loss of social standing and the humiliation that ensued from Mr. McGreevey’s public explication of his sexual orientation as on anything truly legal in scope.  Both husband and wife received intrusive media scrutiny, and paid lawyers many thousands of dollars for the privilege.

The job of any family lawyer includes separating emotions from the facts of each divorce action.  Had Ms. Matos and Mr. McGreevey decided to go the mediation or collaborative divorce route, much of the public sturm and drang could have been avoided.

Hopefully that’s the last we’ll read or see about this tawdry case, and both former partners and their small daughter and can move off the front page and go on with their lives. 

September 15th 2008 Posted to Mediation and Collaborative Law
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Every divorce is different.  Every client who has walked through our doors has been a unique individual, with circumstances unlike any other client, and, therefore everyone in our practice is considered special and distinctive.

That being said, there is one common thread that we have noticed and it’s something very obvious but often overlooked.  Put everything on the table from the outset.  Don’t leave anything out that you want or that you think is or might be important in the coming days, months, and yes, even years.  Vacations, schooling, medical choices, relocating, a significant other, even getting a new dog, all of these issues should be discussed with your attorney from the very beginning.  Doing so will remove a lot of the hassle and heartbreak that roils through many divorces.

Like all of you, we sometimes shake our heads at the stories we read in the papers about celebrity divorces and all they entail.  But we don’t laugh when we read about one former marital partner or the other feeling they are not receiving all they are entitled to because they didn’t ask for something while hammering out an agreement.  Or they agreed to something they shouldn’t have because they were caught up in the moment and didn’t always consider the consequences.  That’s why we say, “Put everything on the table from the outset.”

September 13th 2008 Posted to Uncategorized
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Divorce is no easy matter.  Now plummeting home values and sluggish real estate sales have made divorce even more difficult.

Gone are the days when couples fought over ownership of the house.  Now they are fighting over who will be saddled with the burden it carries.  We see more clients remaining married, if only temporarily, simply because they cannot afford to go their separate ways.

There are several ways in which this tough housing market affects divorcing couples.

If the value of a couple’s home has fallen below the amount owed on the mortgage, neither spouse wants to be burdened with the liability.  If one spouse wishes to keep the home, refinancing the mortgage to absolve the departing spouse of the responsibility for part of the debt is getting increasingly difficult.

Complicating this already difficult situation is the fact that few divorcing couples get along well enough to work in unison to minimize their losses.  Most often, they are unable to agree on a course of action, which can lead to an even bigger financial mess.

Before the onset of this current economic slump, divorcing couples battled over who would keep the home.  Specifically, women fought to keep the house in which the children were/are being raised.  However, even in rosier economic times, this was not always wise, particularly if her income alone was not enough to cover the mortgage, taxes, and other carrying charges.

So what can you do?

The most important thing is to pay close attention to your home’s value when you and your spouse divide the assets.  It is best to get a formal real estate appraisal instead of simply guessing what the resale value of the home may be, especially considering the current weak market.  If the value is skewed, the entirety of equitable distribution of marital assets and liabilities will be distorted.

It may also be necessary to sell some of your investments to generate funds to pay off the mortgage and allow each of you to move on.

If you wish to stay in the home after the divorce, take a long, hard look at the ongoing maintenance costs associated with staying there.  No longer having two incomes and two people sharing expenses can make the home a long-term financial drain instead of an asset. 

September 03rd 2008 Posted to Finances
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