Financial Survival During Divorce

Divorce takes its toll in a number of ways, including emotionally, physically and financially. You seek out friends, family and a professional therapist for emotional support, and a family law attorney to assist with your legal rights and responsibilities. So, when it comes to finances, don’t be tempted to settle if anyone tells you it will “all sort itself out” and you’ll get your half.  

Divorces are highly charged undertakings and it’s important to seek professional advice from a financial planner or certified public accountant who is well-versed in divorce matters. He or she will help protect you from the very start by showing you how to budget, minimize taxes, uncover hidden assets, analyze support issues and come up with an equitable asset distribution plan.

If you start to feel that you’re losing control of the monies spent on experts, understand that funds spent now on getting your financial house in order will pay off royally, and your future self will thank you. Let’s take a look at some of the ways you can prepare.

GATHER FINANCIAL DOCUMENTS

Even if you foresee an amicable divorce, start gathering essential documents now. Make copies of everything and make certain you have important information like contact names, account numbers, balances and interest rates. These might include:

  • Bank accounts
  • Income tax returns for the past three to five years
  • Real property items such as title, tax receipts and mortgage documents
  • Stocks and bonds
  • Brokerage accounts
  • Retirement accounts, including pensions
  • Credit card information, whether the cards are joint or sole responsibility
  • Insurance policies
  • Wills
  • Market values and cost basis of your assets, including any business one or both spouses own

WEIGH YOUR OPTIONS

Focus on what really matters in the long run and you’ll understand that reaching a fair and equitable settlement during your divorce is key. Seek out help for emotional issues that are sure to come up, and do your best to leave them out of the proceedings. Easier said than done, to be sure, but even being aware that your emotions are taking over can be helpful for reining them back in. Avoid knee-jerk reactions to recommendations and give yourself time to weigh each one. Based on the information you’ve gathered and made available to your financial advisor, you and your attorney will be able to negotiate a reasonable resolution of all financial issues.

Explore with your attorney the possibility of mediation as an option, as this non-adversarial approach can result in considerable costs savings. If you decide to go this route, be sure to run any settlement agreement by your financial advisor to be sure you are properly protected.

Plan now so that you do not become a financial victim during your divorce. Remember the goal is to come out of it with your finances in their best possible position. Financial planning will help ease your transition from married to single by helping you to develop realistic expectations, prioritize your financial goals and create a solid financial future.

What are the Differences between a Family Restraining Order and a Criminal Protective Order?

Family restraining orders and criminal protection orders are created to help protect family members who are victims of abuse. Although these orders do not always stop the abuser from stalking or harming a victim, the victim can have the abuser arrested if they break the order. Both orders have the same purpose to protect the victim, but there are some subtle differences you should know.

Every state has some form of protection order; however, each state’s order protects different things. In Connecticut, the protection order is put into place when a member of your household has been arrested for hurting you. These orders are only valid until the criminal case ends and are not necessarily put into place to protect other members of your family. Protection orders can include different provisions including:

• Prohibiting the abuser from contacting the victim. This contact includes calling, texting, emailing, stalking, attacking, hitting, or disturbing the victim.
• Some protection orders allow for peaceful interaction if there are children involved.
• Abusers are sometimes ordered to stay away from their victims or at least a certain number of yards from their victim’s home, place of work, school, or transportation.
• A protection order may require the abuser to move from the home shared with the victim.
• Some states require that an abuser surrender and not purchase any firearms during the time of the protection order.
• Counseling may be required by the protection order to help ensure the abuser can maintain and to follow the restrictions placed upon them.

 

A criminal protection order can be placed over the victim of a crime if there is fear of retaliation.

 

Whereas a restraining order is put into place to last beyond the length of the criminal trial and can protect other members of your family as well. A restraining order can protect:

 

• Your spouse or former spouse
• Someone you are dating or used to date
• Your child or children’s other parent
• Your child, children, parent, or any other relatives that may be in danger
• Or, someone you live with or used to live with who may be in danger

 

Restraining orders are created to keep an abuser from hitting, kicking, biting, scratching, or threatening to do you or your family members harm.

The Full Faith and Credit Clause of the Constitution require that a protection order be enforced in the state it was created and honored in all other states and territories as well. That means if an abuser stalks a victim out of the original state the order was created, they are still in violation of the order and may be arrested.

Taxes and Divorce – who files head of household, who claims children as dependents, who claims mortgage interest deduction, etc.

You have filed for divorce, and soon it becomes tax time. How do you handle your new filing status? Who gets to file for head of household? Who claims the mortgage interest? Taxes after divorce can be complicated and if not handled properly may become an important financial blow to both of you.

 

When you were married, you could file your taxes jointly and would enjoy many tax benefits, as a single person, your tax filing status changes. What happens when your divorce becomes final on December 31st? Then one of you can claim head of household if you have lived together for more than six months of the year. Your filing status depends on your marital status at the end of the year.

 

One of the biggest tax strains on divorced families is who gets to claim the kids. This subject can become a bit tricky. Prior to 2009, you could use your divorce settlement to back up your claim. That is no longer the case, now the IRS form 8332- “Release /Revocation of release of claim to exemptions for child custodial parent” must be signed by the custodial parents for the non-custodial parents use.

What are the differences among an annulment, a divorce, and a legal separation?

There are distinct differences among the options for separating from one’s spouse, which include legal separation, annulment, formal divorce. Still, there remains a common thread linking these alternatives: in all cases, a married couple seeks separation on some level so as to live apart (temporarily or permanently). Whether or not the couple wants to divide assets or seeks mediation to craft parameters for any ongoing relationship (including co-parenting) is specific to each couple.

 

Separation, annulment, and divorce have another trait in common: each is a formal declaration which initiates legal and financial consequences. Note that individual states, including Connecticut, hold specific standards and expectations regarding how couples break up, so it’s smart to do research and to seek legal advice before proceeding to protect yourself and your family.

 

An annulment may be preferable on some levels, as it effectively erases any record that the union took place; certainly annulment is useful for one who seeks to proceed without the supposed dishonor of divorce, which is the official and legal end to a recognized marriage.

 

Annulment, Divorce, and Legal Separation

We often get the question “what is the difference between an annulment, a divorce, and a legal separation?” The ending of a marriage or partnership may be emotionally charged, and arguments may replace reason. During these times, an attorney experienced in the state with jurisdiction over your case may be required to help provide direction and insight to help resolve the conflict.

 

Divorce is a legal dissolution of a marriage or domestic partnership and declares the husband and wife, or domestic partners to be single again. A divorce may mean involvement with your ex-spouse for years to come if children or finances are involved, but both parties are free to marry or enter into another domestic partnership again. This is one of the most commonly used methods of ending a marriage or domestic partnership.

 

Divorce Business Valuation

 

Divorces are complicated, and when a family business is involved they become even more complex. Typically the business is income for the family and is considered property during divorce proceedings, especially if both spouses have ownership rights. Each spouse will want their share when the marriage ends. A business valuation may be done to determine the monetary value of the marital property, or in this case the company.

Business valuations should be done if the divorcing spouses cannot agree on a reasonable approach to sharing the business and an appraiser should be called in if one or the other spouse cannot agree on the value of the company. Connecticut courts follow the equitable distribution model to ensure fairness to both parties, and will label each asset owned by the couple. These labels include:

     • Husband’s separate property

     • Wife’s separate property

     • Marital property

 

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A valuation is a complex task that should be carried out by a professional and may include a team of attorneys, accountants, and financial professionals.

Is your Spouse Hiding Assets During Divorce Proceedings?

Surprisingly enough, it is fairly easy to hide marital assets during divorce proceedings, especially if one spouse was responsible for managing the marital finances and the other spouse is unaware of what was going on financially. One spouse may suspect something is not adding up financial when reviewing the assets, but the problem lies in that suspicion and proof are two different animals, and proving that one party is hiding assets can be difficult. From the moment you get married, both spouses should be involved and aware of all financial transactions, assets, liabilities, income, and expenses.

If you are considering a divorce be sure to learn about the most common tactics used to hide personal and business assets, and if you do suspect your spouse is hiding important financial information consider hiring a forensic accountant (especially one who is trained in and has experience in evaluating financial reports and assessing the values of a business or investments).

 

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Some of the more common tactics are:

  • Asking for delayed delivery of a bonus check, retirement check, pay increase, or stock option until after the divorce is final. If one spouse does not want to report their full income, this is a common tactic to take.

  • Your bank statements or financial statements are no longer going to the house. This should be a giant red flag that something is going on.

  • You own a business that hasn’t increased its customer base, but has increased the number of employees. These “new” employees may or may not be real, so be aware of any new expenses with a check written to expire immediately after the divorce is final.

  • A sudden decrease in salary for no explainable reason is another indication that one spouse may be hiding money.

  • Your spouse is making intentional overpayments to organizations like the IRS. Once the divorce is final, they will receive a refund for the amount of the payment and not have to report that income during the proceedings.

  • Payments that are made to a close friend or family member for “repayment” of an unknown debt may conveniently be returned upon the divorce.

There are a few things you can do though to help prevent asset hiding:

  • Have all antiques, hobby equipment, gun collections, artwork, and tools appraised. These pieces are commonly overlooked by either one spouse or the other. Have a professional appraiser put everything in writing and be sure to keep a copy for your records.

  • Pay attention to the monthly bills. Know what is coming in and what is going out financially. Check credit card statements on a monthly basis, and note if your spouse’s lifestyle exceeds their reported income.

  • Know how much cash is on hand.

  • Know where all of your financial paperwork is located and review it on a regular basis.

  • During your divorce be sure to work with a qualified divorce team to help ensure you have the professional information and expertise you need to receive a fair settlement and will help you keep your finances intact during this difficult time.

Divorce can be a difficult business. Having qualified professionals walk you through every step of the process can significantly reduce stress and help increase the chances that you are being treated fairly.

For more information, feel free to email us at:

costello@cbdlawpc.com

or give us a call:

203-254-3340.

Same-sex Marriage and Divorce in Connecticut

With the legalization of same-sex marriages there comes the issue of same-sex divorce, and in most states, including Connecticut, the same divorce laws that govern traditional marriages, also apply to same sex marriages. Same-sex marriage is fully accepted in Connecticut, and the process of marrying is no different than the process of marrying for heterosexual couples. Same-sex couples must recognize though, that a marriage legal in one state may not be recognized in another state if they move.

 

Since 2008, Connecticut has allowed same-sex civil unions to take place. In October 2010, any and all preexisting civil unions were converted into marriages. Like many other states, Connecticut recognizes same-sex marriages from around the United States as a legal union.

 

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To marry in Connecticut, same-sex couples must follow the same residency requirements as a traditional marriage. Couples wishing to marry must be a resident of Connecticut for at least twelve months.

 

The divorce of same-sex couples is also the same. Same sex couples interested in divorcing in Connecticut must have at least one party still living in the state for at least a year before the final divorce decree is given.

 

If there are any marital assets obtained during the marriage, the assets will be divided equally between both parties. These assets include any property and or/debt.

 

As in the divorce of a heterosexual couple, if there are children involved, custody and child support will need to be determined and is treated the same as a heterosexual child custody case. The same ruling also applies to spousal support.

 

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From the beginning of the union, same-sex couples should consult with an attorney who can help them avoid any potential issues that may arise later in the marriage. Same-sex couples should consider a prenuptial agreement or other sets of legal documents needed during the union.

 

Same-sex marriage, divorce and family legal issues can be complicated due to the difference between state and federal law. The attorneys at Costello, Brennan and DeVidas P.C., are here to help you through every step. Call us today to learn more.