17 Sep Divorce Costs

According to a recent AVVO divorce study, couples are most concerned about the costs of divorce.  People today have more choice in how they will proceed with their divorce..from  doing it themselves , mediation, collaborative practice,  lawyer negotiations to court.  The survey  indicated that a majority of people  (58%)  site the cost of divorce as a major factor/concern  in moving forward with the divorce.  When reviewing what approach may work best for  a family, making the right choice in terms of professional fit , control, timing are all  things that need to be considered. However, the reality of the total  expense for the family appears  to be a big  part of the decision.

It’s important to establish from the beginning some sort of “divorce budget”and understanding the value proposition of any process  you ultimately choose.  Being quoted the hourly rate or first retainer  is not enough information. Getting the answer .. “it depends” to the question “How much will this cost”  may not be good enough anymore.  Understanding that other professionals are part of a divorce team and learning  what they all do in the process, what they charge, what their involvement may be , and  what couples can do on their own, helps  in understanding what the  ultimate  costs may be .

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11 Mar Divorce Costs Followup

As a followup to my previous blog today take a look at this article from the  BBC and UK about the rising costs of divorce.    It quotes a report by the Legal Ombudsman for England and Wales showed complaints by clients in divorce and family law were higher than in any other category.

http://www.bbc.co.uk/news/uk-21611496

Have you gone through divorce recently? What do  you think of the costs involved?   At the end of it all, did you get value for what you paid for?

11 Mar Even billionaires are concerned about the “costs” of divorce

Billionaire T. Boone Pickens was recently divorced from his 4th wife and chose collaborative practice to settle his divorce.

For the whole story, go to http://www.bizjournals.com/dallas/blog/2013/03/t-boone-pickens-on-how-to-save.html?ana=e_abd&u=rk2Eh9uif4Sgj7UM9KhZGpj2jD7&goback=%2Egde_2936590_member_219548098

“The collaborative approach saves both money and emotional wear and tear on families.” Pickens said.

Should non billionaire couples consider the costs of divorce before choosing how they divorce?  Couples should do their research about different processes and the costs of each process.

Creating a  separation agreement with the help of a mediator means you share the cost of one mediator.   If you are choosing the collaborative law approach, you are each working with your own lawyers however,  much of the work can be taken on with the help of  other collaborative team members.

If you have a family professional, rather than your own lawyers,  they help to create and draft a parenting plan.  This is  a shared cost (usually at a lower hourly rate than lawyers).  If you use the assistance of a divorce financial professional, like a Certified Divorce Financial Analyst (also usually at a lower hourly rate than lawyers) to help with gathering the financial information, you’re sharing that cost (and the work too as there is usually one spouse that has handled all the family finances and is better at accessing all the financial statements and documents).

Billionaires become billionaires not only because they make millions… they also recognize when they have the opportunity to save a million or two.

15 Nov Financial Literacy Month Quiz!

 

November is Financial Literacy month  in Canada,  http://www.financialliteracymonth.ca/ 

We experience dealing with money at an early age.  From getting money from the tooth fairy, saving coins in our piggy bank and opening our first bank account with allowance or birthday money.  We also learn how to spend money quickly.  Because we have experience with money throughout our daily lives, it doesn’t mean that we have  acquired the knowledge and skills to make responsible financial decisions.  After all, money doesn’t come with instructions.

When facing divorce, it’s crucial to acknowledge what level of financial literacy you have.  Take this simple quiz to assess your financial health:

http://www.womenindivorce.ca/womenfacingdivorce/tools/checkingmyfinancialhealth.html

 

Image courtesy of vichie81 at FreeDigitalPhotos.net

15 Oct Divorce Settlement Options

When it comes to the financial aspects of divorce, it not just lack of understanding of the family’s finances, it’s the lack of information about a family’s financial picture that tends to make good financial decisions challenging  for couples when they decide to divorce.

One spouse may  know more because they managed the family investments or were in charge of paying the bills.  After all, the couple may have thought it would be a waste of time for both to balance the check book twice every month so one takes the responsibility and tends to keep doing it throughout the marriage.

Important decisions to be made when negotiating your settlement need high quality information from which to judge the options. The spouse with less knowledge may spend more time collecting documents,  working on past and go forward budgets. This is the most important part of divorce financial planning.   Decisions regarding finances are based on choosing one option relative to another. If you are confronted with a decision you must make based on limited information you risk  reaching a poor conclusion that may  affect you for a long time.   That’s why divorce financial planning before, during and after is critical to  your future when dealing with separation and divorce.

 

Image courtesy of Keerati at FreeDigitalPhotos.net

12 Sep Do I have to keep saying no to my kids?

 

One of my clients described how her son was afraid to tell her that he’d outgrown his running shoes. Another said her daughter declined invitations to go to the movies with her friends because she didn’t want to have to ask for movie money. Kids understand the financial changes that occur after divorce.

How can you make ends meet and maintain your family’s lifestyle if your income after divorce is insufficient?

Child support payments are not intended to cover all costs associated with raising a child, and often fall far short. They take into account the cost of food, housing, and clothing. But they do not cover a range of other expenses from after school activities like music lessons or sport lessons to vacations, or cell phones to school supplies. These expenses rise significantly as children get older. Does everyone under the age of 18 really have an I-Phone?

The first thing to do, whether you’re contemplating divorce or are in the process of divorcing, is quantify how much your lifestyle truly costs. As a divorce financial professional, I help clients put together projected budgets. It’s important to account for as many details as possible:  the cost of summer camp, rep hockey, tutoring, a computer the child will need for school in later years.

Then we weigh these financial needs against a couple’s ability to pay. Does the family income cover this budget plus a reasonable amount for the non-custodial parent?  If not, can a division of marital assets help supplement the difference? Can we scale back to a bare-bones budget? Can we distinguish between wants and needs?

In divorce, financial support comes from 4 sources: Employment Income, Child support, Division of marital assets, spousal support. Each of these sources has different tax and financial consequences.  Yet because household spending on adults and children is intertwined, all three can contribute to a child’s financial welfare.

I work with clients to look at the financial and tax implications of proposed child support and spousal support payments along with the proposed division of marital assets.  I use software to project the short and long-term impact of a proposed divorce settlement. These projections can be really powerful.

 

What if you’re already divorced and find that you can’t make ends meet,  a financial planner specializing in divorce can work with you to put together a saving and spending plan and help give you a holistic picture of your finances.

Wouldn’t it be nice to say “yes” to your kids once again?

 

Image courtesy of FreeDigitalPhotos.net

13 Jul Summer Spending

With hot summer days, the malls are a cool place to beat the summer heat.

Summer time means summer sales are on in full swing.  With the economy as it is, the discounts stores offer are deep and tempting.  As much as you may try and stick to a budget, it’s hard to do when the 70% sales signs are calling. Say good bye to budgeting as we can always rationalize a “great bargain”.

Budgeting is never fun. Implementing an annual budget and breaking it down by month and even by week and then day by day is challenging and take lots of discipline. Temptation is great with the deals stores have going on. Stay strong.

Put away the credit cards when you head to the mall. Just say “no” to spending more. Treat yourself to a gelato or iced coffee to keep your financial cool.

 

* image from FreeDigitalPhotos.net

29 Jun Start thinking of “smart spending” when divorcing

If you are divorcing or newly divorced, and trying to figure out how you’ll manage financially, it’s hard to think about your spending along with all the other issues in divorce. However, while you’re working through your settlement, you can start to think about how to save in many ways without feeling like you are “penny pinching”.  Each savings will add up more than you could believe possible.

Did you know that every minute water flows down the drain wastes up to 2.5 gallons? So turn off the water while brushing your teeth or shaving. Only run the dishwasher and washing machine when you have full loads, water plants in the morning when the water is less likely to evaporate.

Drive the speed limit, go easy on the brakes, and carpool when you can. The more moderate your speed, and the less you rev the engine, the less gas you are going to use. This could save you $4 to $40 a month depending on how much you drive.

Almost a third of gift cards go unused. And more get used too late. If you read the fine print on the back of the card, you may be shocked to see that some cards expire as quickly as six months after their purchase. Others charge $1 to $2.50 for dormancy, maintenance, or inactivity fees if they’re not used within 6 to 24 months. Solution: Shop and save the face value of your card!

The average household gets 15 bills a month. At 61 cents a stamp that’s over $100 a year. See if your bank offers free online bill payments.

It may not seem like a lot, but most out-of-network banks charge $1.50 to $3.00 for a bank withdrawal. Would you like to take out money and only get 97 percent of what you asked for? That’s what you get if you take out $100. Plan ahead and go to your bank’s ATM. You could save as much as $30 a year.

The point of insurance is to protect you when something really bad happens, not for small claims. Raise that deductible on your car or homeowner insurance and save $200 to $300 a year.

If you followed all of these tips, you could save hundred a year!

05 Jun Measuring Your Lifestyle

A business metric is any type of measurement used to gauge some quantifiable component of a company’s performance. Business metrics are part of the broad area of business intelligence, which comprises a wide variety of applications and technologies for gathering, storing, analyzing, and providing access to data to help enterprise users make better business decisions. Creating a “metrics” to measure family lifestyle can be a valuable tool when you are separating. It useful information to have and it is usually part of the financial disclosure information required.

A family’s “lifestyle metrics” includes

  • The day to day living expenses incurred during the marriage
  • Spending habits of the individual family members
  • Recurring  expenses by category of expense
  • Unusual , non recurring seasonal expenses

Benefits to you :

  • Information is accurate rather than “best guesses”
  • Provides a reality check for couples of where their money is really going
  • Uncovers any gaps /discrepancies between reported income and non reported income
  • Provides more accurate picture of what is required by each spouse post separation
  •  Starting point for  each spouse to develop their own individual future budgets

Speak to me about the possibility of creating a metrics of your family’s lifestyle.

 

01 Jun Financial Homework in Grey Divorce

When you’re considering divorce in your 50’s,    a big concern is the financial impact for you and your spouse at this stage of your lives.  If you delayed having children, they may be young and child support payments may derail retirement plans/savings. You may still be faced with funding post secondary education. You may be supporting aging parents. One spouse may already be retired.

Part of divorce is dissolving your family’s joint financial relationship. This can’t be done unless you know the total financial picture. All the facts need to be on the table so you can determine how best to separate your finances allowing both of you to make the best choices of how you will move forward on your own.

This means doing some homework in advance.  As a start, you need to find and prepare the following documents:

  • Tax returns from most recent tax years
  • Recent paystubs that show payroll deductions
  • List of personal property  such as cars, boats, valuable art, jewellery, antiques
  • Recent statement from Assets:
    • Bank accounts
    • Investment accounts including open, RRSP, RRIF accounts
    • Education savings Accounts
    • Other assets such as Stock options, other Company awards
    • Company Pension
  • Recent statements of Debts: Mortgage, Line of Credit both personal and joint, Car loans
  • Miscellaneous Info: Life insurance, Medical benefit plans
  • Business Ownership details

Doing your homework takes time.  Documents may be hard to locate. You may have to request copies from the bank or your employer. You may not have looked at some of these documents for a very long time.

You can hire a divorce financial professional to “tutor” you with your homework. They can help explain and organize it all so everyone is ready to start.