Tag Archive for: divorce

Post Divorce Finances – Wrapping Up, Moving Forward

After your divorce you will have a new life to build. This may include finding a new place to live, transition your children to their new lives between homes, and becoming accustomed to your new home. While your emotions may be running high and you are excited about your future you need to be vigilant in establishing your own credit and gaining financial strength.

1) Know your credit score. Checking your credit score will give you a benchmark of your current financial state of affairs. Your numerical score will show you if you have work to do to increase your attractiveness to lenders. As you go out and apply for credit – a car loan, mortgage or even find an apartment to lease your credit score will be checked. Poor credit can significantly limit your ability to borrow money. In addition to knowing your credit score your credit report will also display accounts are open in your name as well as any derogatory information that might not belong to you so you can work on repairing it.

2) Close joint accounts.

You and your spouse probably had many joint accounts open such as checking and savings, investments and even debt (credit cards and lines of credit). Dividing these accounts will be handled during the divorce process but it is important to make sure that they are closed. If they are left open both parties have the ability to still use them and accrue debt in your name, which could be problematic for your credit.

3)  Open your own credit

You will need to establish your own credit as soon as possible. This can be as simple as low-limit credit card. Charge items and services to this account and make payments every single month. This should have a positive impact on your credit and demonstrate your ability to pay your bills.

4) Create a budget and stick to it

Living on one income can be difficult so it will be important to know how much you are spending. Establishing a budget will help you track your expenses and ensure you do not go over budget. Have a plan to pay down debt, put a bit of money into an emergency savings account and also some money for entertainment if you can afford it. Being responsible now will lead to great rewards for you in the future.

5) Pay down debt
While you may want to put money away into your savings account it is wise to pay down your debt as quickly as possible. There are many options to do this and you can find a plan that is right for you. Try to send in a little more than your monthly payments each month and also cover the cost of interest charges.

Stepping out on your own financially can be an overwhelming experience. We help you set-up your financial future and as you step into the preparation it is important to move wisely to protect yourself. Put professionals around you for guidance and always keep your eye on establishing security for yourself. Most importantly, make wise and prudent decisions to build yourself the security that you need.

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One Step Closer to Shorter Divorces

Last November the House voted for the passage of Bill 380 which proposes amending Section 3301(d) of the Divorce Code to allow divorce on the basis of separation for a one year period as opposed to the current law which requires a two year separation period. Presently House Bill 380 is in the Senate and still pending a decision as of May 2016. There are several reasons for reducing the waiting period for divorce according to supporters of the Bill. First, reducing the duration for divorce will reduce the turmoil for minor children. There is consensus in the psychological field that continued conflict of the parents is the primary influence on the well-being, or lack thereof, of the children. Second, longer divorces allow for additional litigation and prolonged emotional strain. The third reason offered in support of the bill is the lack of any economic benefit by continuing with a two year separation period. For example, any alimony award will generally be reduced by the period of support received while the divorce was pending such that there is no benefit to a longer separation period.

At this point, Pennsylvania has one of the longer waiting periods for divorce on the basis of separation. New York, Ohio, and Maryland require only one year of separation. New Jersey and Delaware only require six (6) months of separation. The Pennsylvania Bar Association (PBA) has played a major rule in pushing for the passage of the bill. According to the PBA, there has actually been a decrease in divorce since many neighboring states have allowed divorce after only a minimum period of separation. Additionally, a shorter separation period will allow the parties to move on with their lives quicker with less emotional and financial strain as well as promote the best interests of minor children in decreasing the period of uncertainty.

Click here to read more about divorce.

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Should You Keep Your Marital Home After the Divorce?

When you are getting a divorce and own a home with your spouse, you have a few options. One of you may decide to keep the marital home or you can sell it and both move on purchasing or renting another residence. You may love your home, your neighborhood, and want to keep it to provide consistency for your children. Before making any final decisions or trying to negotiate to keep the home for yourself, think about this list of questions:

  1. Can you buy out your partner? As your divorce moves forward your house will be appraised, and the equity you have in the home is up for equitable distribution. If you would like to keep the home you will have to “buy out” your spouse giving them an amount of cash (or equivalent) or negotiate in a unique way.
  2. Refinance the mortgage – can you get a mortgage on your own. You will have to prove that you can so your ex will be removed.
  3. Can you afford the monthly bills? As you know, owning a home can be expensive and goes beyond the monthly mortgage payment. When you factor in taxes, homeowners insurance as well as association fees, cable and power you may be beyond your budget.
  4. Can you afford to maintain the home? When something in your home breaks, the roof starts leaking or a toilet overflows you may need to call in a professional to fix it. These can be costly. In addition to the major repairs all homes require minor repairs every now and again and you must have the funding. Not keeping up with repairs will cause your home to repreciate in value.
  5. Lastly, can you handle it? Maintaining a home with a partner is one thing, what about on your own? If you have significant financial resources you can certainly hire professionals to help you maintain it, but if you have to do it on your own do you have the time, know-how and ability?

Many times parents feel an emotional tie to keep the marital home for the stability of their children. They know their kids are going to go through a bit of an upheaval and feel guilty. In many ways keeping the marital home can cause significant problems if you are unable to financial or physically handle the required maintenance. While you may be emotionally tied to your home it is important to make this decision with an eye on finances as well.  And remember, having financial stability for yourself provides stability for your child.  

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The finances of your divorce – Three Important Parts

During your divorce every nook and cranny of your financial picture will be evaluated. Together we will take a look at the finances you brought into your marriage and then what you and your spouse accumulated together. It is very important that you have a full understanding of your financial picture and copies of all financial documents.

What did you bring into the marriage?

Before you got married you may have had assets including investments, property and savings account. If you kept them solely in your name and they did not increase due to the influence of your spouse, they are yours to keep. If you commingled these assets with your spouse, meaning you added his/her name as an owner, then they are considered a contribution to the marriage and the court will determine how to allocate them. Some counties will apply their own methodology for determining what portion you will get credit back for this contribution based on the date it was contributed and time that has passed. The increase in value of a separate asset is always marital. Usually we look at each asset on a case by case basis. It is important that you provide your attorney with the details of any contributions you made either from before the marriage or through an inheritance and it is also important to have a paper trail of these transactions.

What assets did you build together?

The assets of a marriage are simple to state but can be difficult to calculate. For instance, if you had a 401k before your marriage but continued to then add to it during your marriage, your spouse is entitled to share in the accumulation since the date of your wedding. If you and your spouse purchased a home together the current equity is up for consideration.

Make copies of your statements

A very important part of your financial situation is knowing your current financial situation. When you decide to divorce (or find out you are getting divorced) start to immediately make copies of financial statements. Do not let your spouse try to hide money or claim

Just as every couple is different so is every divorce. You have the ability to negotiate each part of your divorce to ensure you are getting your share of the assets. Additionally, based on other factors such as income and potential income we can always negotiate in other ways as well – trade-offs are common. An experienced divorce attorney will be able to explain your options and negotiate creative solutions for you.

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Pennsylvania Victims of Domestic Violence May Have Easier Road to Divorce Under New Law

On April 21, 2016, Governor Wolf signed into law a bill which essentially simplifies the process for victims of domestic violence to obtain a divorce. Currently, under the Divorce Code, even in the case of domestic violence, if a spouse refuses to consent to the divorce after 90 days, the divorce cannot proceed until there has been a two-year separation. In the new law that takes effect in sixty days (around June 22, 2016), a victim of domestic abuse can file for divorce and the law presumes consent of a party if they have been convicted of committing a personal injury crime against the other party.

Additionally, the new law allows the victim to object to court-mandated divorce counseling if they have a protection from abuse order. The victim can also object to court-mandated counseling if they were a victim of a personal injury crime for which the other spouse has been convicted or is in an accelerated rehabilitation disposition program as a result of conduct for which the other party was a victim.

For purposes of presuming consent to a divorce under this new law, the party has to have been convicted, meaning having been found guilty, having entered a plea of guilty or nolo contendere or having been accepted into an accelerated rehabilitative disposition program. A personal injury crime under this new law is defined as an act that constitutes either a misdemeanor or felony or criminal attempt, solicitation, or conspiracy to commit any of the following: criminal homicide, assault, kidnapping, human trafficking, sexual offenses, arson and related offenses, robbery, victim and witness intimidation, homicide by vehicle, or accidents involving death or personal injury.

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Treatment of Veterans Benefits

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Former military members may be eligible to receive a number of different veterans benefits from the Department of Veterans Affairs (VA). Possible benefits include disability compensation, pension benefits, life insurance, educational benefits and more. Title 38 of the U.S. Code addressing veterans benefits dictates that the benefits are off limits to creditor claims. However, Title 38 has special provisions regarding the support of family dependents. Accordingly, receipt of veterans benefits can be counted as income for support purposes.

Veterans benefits cannot be divided as an asset in a divorce case. This is due to the Uniformed Services Former Spouses’ Protection Act (USFSPA). The Pennsylvania Divorce Code confirms this rule. Under 23 Pa. Section 3501(a), discussing the definitions for marital benefits, veterans benefits exempt from attachment, levy or seizure are defined as non-marital. The definition goes on to draw a distinction between any benefits received in lieu of military retired pay. A similar distinction arises in support cases as far as whether the benefits can be garnished for payment of an award. Garnishment of veterans benefits is only permissible where the service member has waived military retired pay to receive the veteran benefit.

Click here to read about military divorce.

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Updating your Will after Divorce

After your divorce it is very important to update your estate planning documents, most importantly your will. If you leave your old will in place your financial assets, property and even the care of your children may wind-up in the hands of those who you no longer want – your former family members or ex-spouse.

Select a new executor of your will: the executor of your estate is the person who will be charged with distributing your wealth and property. While they are to follow your wishes, if your executor is still your former spouse he/she may not do as you wish or add undo stress when dealing with your family members. When you select an executor make sure they understand your wishes and

Clearly outline who gets what items: Part of the reason you want to clearly spell out the distribution of your items is to avoid fighting by your loved ones after the fact. This can include a family heirloom or an important piece of your jewelry. Rather than have your children fighting over items they were “promised” it is so much easier if you

Name a guardian for your minor children:

In most cases, upon your death your former spouse would be given full custody of your children. If that would not be in the best interest of your children then you will need to spell out why and we suggest you do that under the advisement of an attorney. Furthermore, if your former spouse is no longer in your children’s life due to domestic violence, alcoholism or drug abuse, it is critical that your will contain the right wording and plan for your children. Protecting

Estate planning may seem tedious but is there to protect your wishes should you pass on. Do not rely on state law to handle your estate. Take a proactive approach and ensure that financial assets and care of your children are handled by a responsible individuals who will ensure your children, financial assets and valuables are handled properly.

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Dividing Property in Divorce

Equitable distribution is the term used in Pennsylvania referring to division of marital property at the time of divorce. Marital property will consist of nearly everything acquired in either party’s name from the date of marriage through to the date of separation. It will also include pre-marital assets that have increased in value during the marriage. Equitable distribution does not necessarily mean a 50/50 split of all marital property. Instead, the statute on equitable distribution sets out 13 factors to be considered. Those factors are listed in 23 Pa C.S. 3502. While the length of marriage is a factor in equitable distribution, it does not mean that assets won’t be split at all in shorter marriages.

If the parties have to go to court for equitable distribution, they will be required to submit a statement beforehand laying out what they allege is the marital property at issue, how the factors listed affect their case, and what they are ultimately seeking as an “equitable” distribution. It is important to have knowledge of all the marital assets and debts at issue. Additionally, parties should have documentation to prove the value of any assets and debts to be addressed. Key dates for valuation may include date of marriage, date of separation and final hearing date. Items acquired after the date of separation but prior to the final divorce decree should also usually be excluded.

Click here to read more about division of property.

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Divorce vs. Mediation

Parties often ask what is the best way to proceed when initially contemplating separation and/or divorce. Generally speaking, parties are encouraged to try to reach an agreement to resolve whatever issues have arisen in any legal matter. In family law, agreements are especially encouraged due to the personal nature of the issues at hand along with the belief that it is better for the parties to draft their own agreement rather than allow a stranger to dictate their family dynamics going forward. Additionally, litigation or time spent in court is often the most expensive aspect of a divorce matter.

Both mediators and divorce attorneys can help you negotiate or draft a settlement agreement. The key difference is a mediator is an impartial third party where as an attorney is representing one party’s interest. This is not to say a divorce cannot be resolved with only one attorney; simply that the attorney cannot give advice to both parties since it would be a conflict of interest. Instead, the attorney should make it clear to the unrepresented party their role in the process and the limitations on communication between the attorney and the unrepresented party. Further, it is possible for both parties to have independent counsel and still reach a settlement agreement. If mediation is successful, an attorney may still be needed to file and process the divorce matter.

Click here to read more about options for mediation.

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Keeping the House in a Divorce

If you want to keep the house in a divorce, you may wonder what they will entail. If the mortgage is in joint names or in your spouse’s name, you are definitely going to need to refinance the mortgage into your own name at the time you get divorced, unless your spouse is nice and agrees to stay on the mortgage longer. If there is equity in the home, and not enough other assets to compensate your spouse in other ways, there is a good chance you are also going to need to come up with additional money as part of the refinance in order to buy your spouse out. The equity will be the value of the home at the time of the distribution less all the debt on the home (mortgage, home equity lien, etc.). The amount you will have to pay your spouse will depend on the percentage split of the assets as well where you live. In some counties they will deduct the cost of sale even though you are not selling the home. In others, they do not. If you need to time to be able to refinance, in some cases, it is recommended that you wait the two year period that you can delay a divorce by not consenting. During that time, as long as the mortgage is being paid you can remain the house while you work to build your credit or income so that you can refinance. If you are interested in keeping the house, you will want to check your credit as soon as you separate and talk to a mortgage broker or lender to see what things you will need to do in order to qualify for a loan and then set a plan to meet those steps. You also want to make sure you create a budget to make sure that you really can afford the home. You will need to project your income, the support you receive and the costs of the home, not just the mortgage but all the maintenance and make a decision based on all those factors.

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