Recently in Financial Divorce Planning Category

July 16, 2014

Who Supports the Boomerang Kids After a Divorce?

Who Supports the Boomerang Kids After a Divorce By Andrea VaccaWorking outside of the court system allows divorcing parents of the boomerang generation to consider, discuss and plan for when their adult children return home.

In the New York Times Magazine, there was recently an article about the boomerang generation. Kids are coming out of college and moving back home with their parents, perhaps after unsuccessfully trying to live on their own.

Regardless of whether this is a savvy way for kids to save money without sacrificing a certain lifestyle, or a sign that they are just not able to take care of themselves in this economy, the fact is that these boomerang kids aren't a temporary phenomenon. They appear to represent a new life stage. The article states:

"One in five people in their 20s and early 30s is currently living with his or her parents."

So, there is a 20% chance that adult kids might boomerang. And even if they aren't living at home, there is a great chance that these kids are still partially dependent on their parents for help with rent and other expenses. When the parents of this generation are still living together, they can have a conversation that asks, "What are we willing to do to support our adult children?" But when the parents are divorced, that conversation is a lot harder to have.

A real benefit of resolving a divorce outside of the court system, through collaborative law or mediation, is that these parents can have a facilitated discussion, during their negotiations, about what would happen if their adult child returned to live with one of the parents.

A judge in a litigated divorce will not want to hear anything about this possibility, because courts only require child support to be paid until the age of 21 in New York (and even younger ages in other states). If divorcing parents are relying on a court to tell them what the child support should be, the parent with whom the child moves home is going to be stuck supporting the child on his or her own. There will be no obligation for the other parent to help out financially, and the courts will not be able to change that fact.

Divorcing parents need to have a conversation about, and plan for, the boomerang generation. One option that clients have considered is to set money aside from their distribution of assets and hold those funds in a joint account in the event the child moves back home. If holding funds aside is not an option at the time of the divorce, the divorcing parents can make sure the agreement clearly states that if an adult child asks to move back home, the parents will use mediation, or work with a financial neutral professional, to figure out how to share the costs. The adult child can even be a part of the discussion. Some questions that need to be answered are:

  • What will be the increased costs when the child is living at home?
  • What will be the child's financial and non-financial responsibilities?
  • How much extra is needed from the other parent and what can they afford to give?

With college loans rising, and companies being slow to make new hires, the boomerang generation is becoming a more permanent subset of the economy. What is now a 20% chance of adult children returning home may increase until the economy is - once again - able to support them. The boomerang generation is the new reality, and it makes sense for divorcing parents to at least consider this issue as part of their divorce negotiations.

Vacca - image - headshot - skt - apr 18 2013.jpg

Andrea Vacca
570 Lexington Avenue
Suite 1600
New York, NY 10022
avacca@vaccalaw.com

June 19, 2014

Financial Infidelity and Divorce: It's Complicated

Financial Infidelity and Divorce: It's Complicated By Andrea VaccaThe legal, emotional and financial needs of couples divorcing due to "financial infidelity" are often complex.

When many people hear that "infidelity" was the reason for a divorce, they automatically assume it has to do with sex. More and more often, however, I see that "infidelity" with money is the reason why marriages are ending.

Where physical infidelity may have happened once, twice, or within a limited amount of time, financial infidelity has probably occurred over an extended period, and has done much greater damage.

Financial infidelity includes such actions as:

- Not paying taxes that your spouse believed had been paid
- Secretly spending money to fund an addiction
- Using a spouse's Social Security number to open new credit cards, and proceeding to max them out

This type of betrayal usually goes on for years before the unsuspecting spouse wakes up and realizes its extent. Maybe the unsuspecting spouse had a feeling that something was amiss, but he or she did not want to look too closely for fear of having to change the family's lifestyle. (The financially-dishonest spouse is usually the higher wage earner.)

Whenever the extent of the betrayal is discovered, it is not uncommon that a harsh light will be shone on the relationship and awaken other issues in the marriage.

Whether the financial betrayal is the result of trying to "look good" in the face of an unsustainable lifestyle, or needing funds to feed an addiction, the end result is the same: the divorcing couple is in deep legal, emotional and financial distress.

Financial infidelity is not easy to simply "forgive and forget." If the couple divorces, they will be dealing with the emotional pain of betrayal and the long-term financial implications that result. Reacting by hiring an aggressive attorney may seem like a rational response, but given the often precarious financial situation these couples are in, it's often far from the smartest reaction.

More pragmatic couples will let the hurt, shame and anger subside a little before moving forward with the divorce. This allows them to see that - just because trust was badly abused during the marriage and there was little to no transparency around finances - it is still possible to come to a fair and equitable agreement outside of court.

Not only do these divorcing couples need specialized legal assistance (whether in the areas of divorce, tax, and/or bankruptcy law); but they can use coaching to help them work together in spite of the emotional pain; and financial advice to help them clean up the mess and move forward with their divorce - and their post-divorce lives.


Vacca - image - headshot - skt - apr 18 2013.jpg

Andrea Vacca
570 Lexington Avenue
Suite 1600
New York, NY 10022
avacca@vaccalaw.com

January 6, 2014

Tips to Help Reduce Time and Costs When Negotiating Divorce Agreements

Tips to Help Reduce Time and Costs When Negotiating Divorce Agreements By Andrea VaccaIt is possible to make the divorce process more time- and cost-effective?

When potential clients consult with me in connection with their divorce, one of the first questions they ask is, "How much do you expect this to cost?" and one of the second questions is, "How long do you expect this to take?" Time and money are, understandably, major concerns of anyone entering the divorce process, so I know that these clients want to hear answers that reflect a best case scenario. I can never predict the exact end date or the costs involved, but I can tell these clients that the more of these tips they follow, the more likely their divorce process will run smoother and be more cost-efficient:

1. Make sure your spouse knows that you want to end the marriage. It's understood that asking a spouse for a divorce can be difficult, emotional and frightening, but try to find a way to broach the subject before you retain an attorney. Perhaps you can engage a therapist, marriage counselor or trusted friend to help you have this conversation. One of the least productive ways to start the conversation is to have an attorney send a letter to your spouse announcing your intention to divorce him or her. Remember, your spouse will have to first get over the emotional shock before any productive discussions can take place.

2. Resolve some of the less emotional topics on your own.
Before you meet with your lawyer, find a way to have a discussion with your spouse to determine what issues may be easier to resolve. Perhaps you can agree about how to divide certain assets. Or maybe you've already agreed on a parenting schedule. Any issues that you can agree on ahead of time, even if just in theory, will help you create a framework for the lawyers to work with and speed up the negotiation process.

3. Aim to be amicable. Finding solutions to unresolved issues will go a lot faster if you both intend to work fairly together to reach a compromise. Hire amicable-minded attorneys who are either collaboratively-trained or very settlement-oriented. These attorneys will encourage you to focus on your interests as opposed to your positions and they will help you stay out of court because they are used to settling their cases without relying on the involvement of judges.

4. Utilize other specialized professionals. If agreeing on financial aspects is the largest hurdle, hire a Certified Divorce Financial Analyst to help sort out the details. If emotional or communication issues are causing roadblocks, consider a divorce coach. Relying on your attorney for emotional support or for technical financial assistance can be unproductive and can lengthen the time before settlement is reached. You also get more for your money - these specialized professionals will charge much lower hourly rates than your lawyer.

5. Meet regularly. To prevent the process from stopping, starting, or even regressing, be as prepared and organized as possible and be willing to meet regularly so the settlement process can move forward in a linear fashion.

6. Cooperate, collaborate, compromise. Holding firm to your position and drawing a line in the sand will take more time and therefore cost more money. Be honest, ready to negotiate, and willing to give in on some issues.

The legal, financial and emotional complexities of your divorce will undoubtedly influence how long the issues take to resolve, but by following these tips you can be assured that the process will move forward as cost-effectively as possible.


Vacca - image - headshot - skt - apr 18 2013.jpg

Andrea Vacca
570 Lexington Avenue
Suite 1600
New York, NY 10022
avacca@vaccalaw.com

March 16, 2012

Navigating The Gray Divorce - Part I

Is 60 the new 40?

If we follow the guideposts reflected in pop culture, the answer is a resounding "yes." The new face of MAC Cosmetics is a 90-year-old woman. Christopher Plummer won this year's best supporting actor Academy Award for his role in Beginners, in which he portrayed a a 70-year-old man who reveals that he is gay following the death of his wife. Online dating services such as Gray Date and Our Time are emerging for singles 50 and up. This could be because the phenomenon of couples divorcing after the age of 50 has grown exponentially in the past two decades.

In my own mediation and law practice, I am seeing a definite trend towards what is known as "Gray" Divorce. While the overall divorce rate has gotten lower, according to Gray Divorce and Remarriage, "Boomers, born between 1946 and 1964 already have a divorce rate triple that of their parents."

Late-life divorces can occur for many of the same reasons that they occur in younger couples including economic issues, lack of intimacy and substance abuse. Interestingly, however, a recent Wall Street Journal article entitled The Gray Divorces explains that infidelity is not a major factor in late-life divorce and that seems to be the case among my clients as well.

A key factor in the rise in these divorces is the increased financial independence of women. A recent study by American Association of Retired Persons (AARP) reported that 66 percent of the divorces studied were initiated by the wife. One reason for this is that women over 50 are more likely to have their own careers and be more financially independent from their husbands than were women of previous generations. I hear many clients explain that they were unhappy for many years, but they stayed together until they knew their children were well settled in their own lives. These clients have often lost an emotional connection to their spouse but are not necessarily angry; they are simply seeking a more fulfilling quality of life as they look at the next 20 or 30 years ahead.

Untangling the tapestry of any marriage brings about legal, financial and emotional challenges, but the issues faced in late-life divorces can be even more challenging. In the coming weeks, I will discuss the unique issues that older couples face when divorcing and how well mediation and the collaborative divorce process meet the needs of these parties.

Additionally, on March 29 from 5:30-7:30 p.m., I will be conducting a workshop Navigating Your Divorce With Dignity in conjunction with Certified Financial Planner and Divorce Financial Analyst Ivy Menchel and and Certified Divorce Coach Karen McMahon. There is no charge, but seating is limited. Please contact me for details.

April 20, 2011

How To Divorce Proof Your Business In The Event of Divorce

Jeffrey Landers has an informative blog post on Forbes.com about divorce-proofing your business in the event of divorce. Landers covers the basics of the importance of prenuptial agreements, postnuptial agreements and placing the business in a trust. And it smartly points out that these are options to consider not only if contemplating divorce in the future but also if you're happily married or even single.

March 27, 2011

Why The Team Approach To A New York Collaborative Divorce Makes Sense

When collaborative divorce was first developed, it was a process that involved two attorneys and their clients. The attorneys not only counseled and advised their clients about the law, but also about the financial and child-related issues that needed to be resolved. And they did their best to help with the emotional and communication issues that inevitably arose during the divorce process.

Collaborative attorneys eventually realized that while they were the best source of legal information and advice for their clients, this wasn't necessarily the case when it came to financial issues, child development issues and communication issues. Instead, collaborative attorneys realized it made more sense to refer their clients to other professionals who had specialized training in these areas. And that's when the team approach to collaborative divorce began.

Today the New York Association of Collaborative Professionals and other practice groups train financial professionals, divorce coaches and child specialists alongside lawyers in collaborative practice. As a result, the team approach to collaborative divorce has become more commonplace.

How do these other professionals help the clients in a collaborative divorce?

The financial professionals help the attorneys and clients divide the marital property in a way that makes the most sense to meet the short and long-term needs of the parties and their children. They provide tax information and they can help the parties explore different property distribution and support options.

The mental health professionals can play one of three roles. They either act as a divorce coach for an individual client, they act as the neutral divorce coach for the entire team, or they act as a child specialist. Divorce coaches help the clients deal with feelings such as hurt, anger, sadness and fear that will often come up during the divorce process and that can interfere with a client's ability to make smart choices in the negotiation process. Divorce coaches can also help the clients learn how to communicate better with their spouse, their children and even their lawyers during the process. Child specialists bring the voice of the children to the collaborative process and they educate the parents about child development issues that may need to be considered and addressed. The child specialists will then help the parties arrive at a parenting arrangement and decision-making process that works best for themselves and their children.

Is the team approach more expensive than a lawyers-only approach to collaborative divorce?

Finances and cash flow are serious concerns in any divorce and the need to retain other professionals at the outset of the collaborative process can feel daunting. But when clients take their attorney's advice to bring other professionals onto the team, they will save money in the long run. Not only do the financial professionals, divorce coaches and child specialists all charge less per hour than the lawyers, but when clients receive specialized information and advice from these professionals, they are often able to come to an agreement in less time than in cases where the lawyers are being called upon to play multiple roles.

February 13, 2011

As The Divorce Rate Increases, Divorce Financial Professionals Are Available To Help Clients Make Decisions Based Upon Economic Realities

NPR reported this week that the divorce rate is on the rebound due to the fact that the economy is improving. Some of the reasons cited for this change are the fact that credit is getting somewhat easier to obtain, investment and retirement accounts are benefiting from the rise in the stock market and housing prices are no longer in free fall. I see all of these factors playing a role in my clients' decisions to divorce. But another reason for the increase in cases is that many people have been waiting 2 or 3 years now for their financial situation to improve and they realize they cannot wait any longer. Regardless of whether the economic circumstances are ideal, they have decided to end their marriages. But these clients are not jumping into divorce blindly regardless of the financial consequences. They are ready to face the economic realities head on and figure out a way to allow them to separate from their spouse.

It is for this reason that I strongly recommend that my clients and their spouses hire a financial professional who is certified in divorce financial planning and/or who is certified in collaborative divorce. These professionals can work with one party or with the couple together to help them determine what asset and debt allocation makes the most sense and what support may need to be paid to assure that both parties are living as well as possible post-divorce. If clients to take the time to examine these issues in the divorce process, they have a better chance of achieving their ultimate goals of having more financial security and less emotional stress after the marriage is over.