By Cary B. Stamp CFP®, CDFA™

Most divorce cases in Florida are settled long before they are even scheduled for trial. Mediation sessions and attorney negotiations usually lead to a reasonable outcome in most cases. Unfortunately, it is very hard to measure “results” in a divorce case because cases with similar facts could result in a wide range of settlements. Many factors come into play, such as income, assets and the employability of a non-working spouse.

As financial advisors in these cases, we are often confronted with anecdotal comments from our clients, like “my neighbor got $9,000 per month in alimony and my husband makes more than her husband.”  The lack of complete information in these types of situations makes it difficult to compare two cases. One case may be a high-income/little assets case and the other might be a high asset/low income case. In situations where there is more income than assets, alimony awards are usually higher.  In other words, you may not get the same award as your neighbor, even if your husband earns more income.

Property settlements are generally not the issue that presents the most contention. Division of marital property is fairly straightforward in Florida—it is almost always divided equally between the parties.  There are cases where compromises are made and a larger settlement is offered to one party so the other party is not required to pay spousal support (alimony). Also, compromises might be reached if one party wants to retain the marital home or a business. These situations often call for creativity—there is no “one size fits all” solution.

In Florida divorce cases, the greatest contention almost always revolves around alimony payments. In Florida, the length of marriage generally determines the length of alimony payments and marriages over 17 years presumably result in “lifetime” alimony payments. The party paying alimony is generally released from their obligation upon the former spouse’s remarriage or co-habitation. Also, alimony ends when either party dies.

The challenge is determining the right amount and the length of the payments. Alimony comes in several forms in Florida. It can be a lifetime award, a rehabilitative award or designed to “bridge the gap” until the receiving party finds employment.   It is a common misconception that the spouse receiving alimony is entitled to the “same standard of living” as they had during the marriage. Most divorces do not result in a situation where there is sufficient income for both parties to maintain the marital standard of living.

How do you know if you are getting a good deal?  A good accountant or financial advisor should review your settlement before you sign. Attorneys are excellent negotiators but their expertise does not always encompass comprehensive financial planning. A Certified Divorce Financial Analyst can help determine what you will need for living expenses, the investments available to generate income and how to fund your retirement and other goals.  Adding a CDFA or CFP to your team will assist in one of the biggest transactions of your life—make sure you get the answers before the case is settled.

If a quest for financial security is one of the reasons you got married, rest easy, you don’t need a husband for that. Cary Stamp & Co. will help you find the financial security you deserve.

Call us at (561) 208-8333 for an appointment to get started on your future of financial security.

Cary Stamp & Co., 110 Bridge Road, Tequesta, FL 33469

Securities and Advisory Services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Divorce planning and services offered by Cary Stamp & Company are separate and unrelated to Commonwealth.

The traditional divorce process is not conducive to privacy.  It parades before the public all of a family’s financial information.  In addition, it provides a forum upon which the public can view and comment upon a divorcing family’s emotional turmoil, their secrets, and their sometimes less than perfect family dynamics.  Collaborative divorce is one alternative to the traditional forum of litigation (in which the parties often battle it out in court and lay bare all of their secrets to public scrutiny).  Collaborative divorce provides a confidential and private forum where the parties can work out their differences safe from public scrutiny.  If you are facing the end of the marriage, you may want to consider whether you want to use a private process to protect your confidential information.

Attorney Dick Price, in his Collaborative Divorce Blog, recently outlined some of the reasons why people might want to protect their privacy through a collaborative process.

1.       Many people using collaborative law own their own businesses.  They may have a family business or had started a business during their marriage.  In addition, there may be a small business they have nurtured with a plan to grow in the future.  Divorce for business owners can be scary because of the possibility of disrupting or damaging the business or the plans for expansion.  Owners normally do not want their competitors to be able to find out financial details about their business and don’t want their competitors to get aggressive while the owner is distracted by a public protracted litigation divorce.  Under these circumstances, keeping the divorce quiet makes good business sense;

2.       Professionals are often drawn to collaborative divorce.  Well known physicians, lawyers, accountants, engineers, and mental health professionals usually want to protect their professional image.  A messy public divorce can tarnish and sometimes destroy a public reputation that has taken a lengthy time and a great deal of effort to produce.  If a professional reputation is damaged through a divorce, then that professional’s business and future income can be damaged;

3.       Sometimes people going through a divorce do not want their neighbors to know.  Not all neighbors are wonderful and supportive.  In addition, many people would not want their good friends to know or discuss their finances, personal habits or family issues;

4.       In a similar fashion, some people would not want some of their nosey and less supportive relatives to know about their finances and family issues.  Every family contains busy bodies who love to gossip and are troublemakers.  Some people will have nasty relatives who are just troublemakers.  In those situations, it can be very beneficial to have your divorce completed privately; and

5.       To some parents, protecting children is the most important value.  Children should not be exposed to adult disagreements and should not become players in the process in a divorce case.  Children should not be able to read about their parents’ divorce in the paper or have their friends comment to them at school and during their activities about their parents’ divorce.  Children should not be able to go to a courthouse later in life and find contentious documents with unflattering statements about their parents.  Kids obviously know that a divorce is going on, but they do not need to know about the gory details or financial disputes between their parents.

As people in Palm Beach County realize, we live in an age where privacy seems to be slipping away because of the increasing intrusion of technology into our lives.  It is beneficial to have a divorce option that provides a process for parties to privately work with their attorneys and other neutral professionals in a private, confidential and civilized manner.  Collaborative divorce is an option that provides people in disintegrating relationships with that opportunity.

Charles D. Jamieson, Esquire practices Marital and Family Law in adversarial and collaborative cases in West Palm Beach, Florida.  He is Board Certified in Marital and Family Law by The Florida Bar.  Trained and experienced in Collaborative Law, Charles D. Jamieson has been an attorney for over 30 years.  To learn more about him and his divorce and family law blog, visit his website: www.cjamiesonlaw.com and visit his blog:  Palm Beach County Divorce and Family Law Blog at http://blog.cjamiesonlaw.com/

Everyone acknowledges that collaborative divorces are much less expensive than the traditional litigation method of dissolving a marriage.  However, there are ways in which one can save on attorney’s fees, even during this less expensive process.

Like all people going through a divorce or other family law issues, participants in a collaborative divorce are interested in conserving their funds and not overspending on attorneys.  Richard Price, a collaborative law attorney in Texas, recently offered the following suggestions:

1.       Communicate by e‑mail rather than by telephone.  Telephone calls tend to be more expensive because of the pleasantries that are exchanged before you and your attorney get down to business.  On the other hand, by its nature, e‑mail communication can be more brief and to the point;

2.       Keep your e‑mail short and to the point.  Your attorney may receive dozens and dozens of e‑mails each day.  If you keep your e‑mails short and to the point, your attorney can respond quickly to the issue you’ve raised without having to wade through a lengthy e‑mail and process several issues at once.  The more concise the e‑mail, the more concise the answer;

3.       Organize your financial documents before you give them to your attorney.  In Florida and elsewhere, parties in a divorce case must exchange numerous financial documents.  They can include tax returns, credit card statements, bank statements, brokerage statements, real property documents substantiating real property issues, and personal property lists.  Respond promptly to your attorney’s request for financial information.  Having organized financial documents can save you hundreds or possibly thousands of dollars in attorney’s fees or paralegal fees and can keep your case moving forward in a quick, informal or quicker manner.  If you have personal or work time restraints and are not available to perform this task, then you should ask your attorney for a referral to a financial professional who can assist you;

4.       Batch your questions.  Clients can save money by controlling their urge to call their attorney to discuss every issue that comes up or pops into their mind.  Instead of contacting your attorney each time you have a question, batch your questions together so that when you have an office conference with your attorney or speak to your attorney over the phone, you can proceed through the questions that you’ve accumulated in an orderly process; and

5.       Make sure that you have an agenda before every meeting with your attorney.  Meetings with a purpose take less time to accomplish than just periodic meetings.  If you have an agenda, then you are more likely to obtain the answers to the questions that have recently occurred to you, address the issues that have occurred in the case, and have a much better sense of what’s happening in your case.

If you follow the above guidelines, then you are likely to spend less money for attorney’s fees in your collaborative case or any other legal case in which you may be involved.

Charles D. Jamieson, Esquire practices Marital and Family Law in adversarial and collaborative cases in West Palm Beach, Florida.  He is Board Certified in Marital and Family Law by The Florida Bar.  Trained and experienced in Collaborative Law, Charles D. Jamieson has been an attorney for over 30 years.  To learn more about him and his divorce and family law blog, visit his website: www.cjamiesonlaw.com and visit his blog:  Palm Beach County Divorce and Family Law Blog at http://blog.cjamiesonlaw.com/

Divorce negotiations can be tricky. I mean if you two were “on the same page” you may not  be in divorce court, right? What makes collaborative divorce process different is that the process itself address the top 5 reasons divorce negotiations go wrong.

Reasons Divorce Negotiations Go Wrong

1. You are at different emotional stages in the divorce process. Just like the stages of grieving when a loved one passes, you will go through (and bounce back and forth between) different stages of grief in the divorce process. This is true even if you are the one filing for divorce. when one of you is not ready emotionally, it’s difficult to engage in divorce negotiations.
2. Fear. One, or more likely, both of you will confront fear at some point during the divorce process. The most prominent fear is that of financial insecurity. When you are in a state of fear, your brain chemistry changes. This makes rational divorce negotiations difficult, if not impossible.
3. Desire to inflict blame or retribution. We can’t help it. We’re programed to blame someone or something when things go “wrong.” And by wrong, I mean differently from what we expected. In no-fault divorce states like Florida, the legal system does not place blame or exact retribution on the “offending” spouse. When one spouse wants to engage in the “blame game” divorce negotiations often grind to a halt.
4. Feelings and emotions get in the way. In the same way that fear impacts our brain chemistry, emotions also affect our ability to negotiate. Emotions are not good or bad; they just are. Until you can work through your hurt and/or anger, the likelihood of successful divorce negotiations are slim.
5. Different negotiation styles. Personality traits, tolerance for taking risks, and familiarity with the topic all influence how we negotiate. When each spouse has different levels of these factors, offers are viewed with suspicion. We tend to automatically default to the “no” position.

Collaborative divorce lawyers and mediators are trained to consider all these factors (and more).  The collaborative process ensures that both spouses will have a way to talk about these top five factors and deal with them in a safe place. Knowing that your needs will be considered is one of the hallmarks of collaborative divorce negotiations.

ADULT CHILDREN OF DIVORCE

Divorce is a life-wrenching experience for both adults
and children. The adults at least have some control over
their lives and the ability to understand what really
happened. After all, it’s their divorce. But the kids get
dragged, kicking and screaming sometimes, through the worst
loss of their young lives.
Usually they find ways to cope. But the very behaviors
and attitudes they develop to help them survive can later
make their lives unmanageable. Diane Fassel, in her book
Growing Up Divorced (Pocket Books, 1991), describes the
effects.
Not all adult children of divorce have all these
symptoms. Some specialize in one or two as survival
strategies.
1. an overdeveloped sense of responsibility (for
others, usually not for oneself)
2. attempts to control everything (to stave off chaos
and unpredictability)
3. fear of conflict (fear of losing control of anger)
4. taking sides (because they often find their identity
through playing a role, rather than from a sense of who they
really are)
5. fear of abandonment (physical and/or emotional)
6. difficulty setting limits and personal boundaries
(often let others take advantage of them–and then feel used)
7. feelings of helplessness (stemming from
uncertainties about how to respond to situations)
8. obsessive concern with economic security
9. difficulty trusting others
10. unrealistic expectations about marriage
As if this were not enough, many children of divorce are
exposed to violence, addiction, abuse and poor communication
between their parents prior to the divorce. Since children
learn what they live with, they often grow up to repeat these
behaviors as adults. It’s all they know about how to do
family.
There is no doubt at all that divorce is a major crisis in the life of a family and all members are affected. Nevertheless, there are things that parents can do to minimize the negative effects on their kids.
1. Be aware of the temptation to take sides and take steps to avert it. Let the kids know that no one is at fault. It?s just a change the parents are making because they?re not happy together anymore.
2. Make sure the kids know this is not about them and that there?s nothing they can do to change it.
3. Reassure them that the major aspects of their lives will continue without major change, and then make it true. (If you can?t make it true then don?t promise it.)
4. Remind them that although Mom and Dad are leaving their marriage, neither of them are leaving the kids. And then make sure that is true!

Some think that the fifty-year rise in the divorce rate was a terrible thing. I say “was” because that rise now seems to have leveled off at just under fifty percent. Maybe, after all, it’s not so terrible that people can now do what they want to do, even change their minds, that women can support themselves and their children or that spouses can choose not to live with abuse, infidelity or emotional isolation. It’s the damage to kids and to society that people worry about.

But wait. We shouldn’t assume too much, even when it appears logical and intuitive that children would be permanently scarred by the losses and uncertainties involved in their parents’ decision to split. The truth is often more complicated, especially when the subject is human.

And the way we arrive at the truth is through careful, scientific study, not biased conjecture. This is what we’re offed by E. Mavis Heatherington of the University of Virginia in her book, For Better or For Worse (W.W. Norton). Heatherington, one of our leading scholars of divorce, followed 2500 children of divorce from 1400 families over thirty years.

Twenty percent of children of divorce are troubled, compared with ten percent of those in intact families. They also face a higher risk of getting divorced, themselves. Some people never do recover from their divorces–but these are mostly men, not women and not children. In fact, some adults and children, especially women and girls, actually do better after a divorce than they did before. They may grow and become competent in ways they never would have before the break-up.

Of the twenty percent who didn’t thrive, Heatherington found that many of their problems predated the divorce. Living in an unhappy family is just as dangerous for kids as breaking it up.

As a society and individually as parents we all want children to reach their highest potential. But they need good “growing ground” in order to do so. The costly negative short-term and long-term effect of divorce on children has long been researched. Although many court districts mandate for divorcing couples with children to take a parenting-divorce course, the varied psychosocial and emotional needs of children are often missed. Consider the following case narrative:

  In a session with a child of divorcing parents, the Child Specialist asks the child to, “Draw a picture of you and your family doing something together.” Sitting slumped over at a children’s desk the child draws with colored markers a ping pong table. On one side of the table, holding a paddle in hand is a female figure (“the mother”), on the other side, also holding a paddle is a male figure (“the father”). The faces of the figures look angry and contorted. In the middle of the table is a ball. “Where are you in this drawing?” asks the Child Specialist. The child responds, “Oh, I am the ball in the middle.” The Specialist then asks, “If that ball could speak, what would it be saying?” The child states, “Stop hurting me.”

In the above example, in a neutral environment, the child is able to express for the first time how he is really feeling. Caught in the conflict between his parents, he does not honestly share with either of his parents his true state of suffering.  The parents, although very well educated, caring and nurturing parents to their child, are both so preoccupied in their own complicated emotional turmoil, that they are unable to fully recognize the extent of their son’s emotional hurt. The child, loyal to both of his parents does not want to choose between his mother and father who are both battling over custody and other affairs.  As each parent separately seeks advice from his or her individual attorney, the crucial needs of the child become further and further overlooked.

Collaborative Divorce offers divorcing parents an alternative course of action that eliminates the need for litigation—a legal process that is very expensive—emotionally, physically, socially, financially and spiritually. Untangling interwoven lives is extremely difficult.  When children are involved the painful separation is even more complicated.  In Collaborative Divorce a team of trained professionals work together to help divorcing couples navigate the divorce process by means of agreed contracting. Most importantly divorcing couples and their attorneys sign a contract agreeing to settle matters “at-the-table”—so to speak—thus alleviating the option of litigation. The attorneys agree to resign from the case if the parties are not able to work through their differences—a rare problem in Collaborative Divorce. The team is made up of Family Law Attorneys, Financial Specialists, Mental Health Specialists and a Child Specialist. Each professional has a defined role within the process. In regards to the Child Specialist, his or her role is to advocate for the “voice” of the child.

The Child Specialist’s unique role is to gain the perspective of each child in the family while also providing a safe haven for children to express themselves. The Child Specialist also listens to the parent’s hopes and dreams for their children’s future. From the perspective of both parents their children’s highest good is put forth and examined. In this light the divorce experience is thus reframed and parents can begin to make decisions with their children’s best interests as a foundation.  The Child Specialist works collaboratively with the other team members to help make recommendations and advocate on the children’s behalf. In this way the children’s voice is heard and represented.

By Cary B. Stamp, CFP®,CDFA™

Recent court rulings in Florida divorce cases have held that when the alimony calculation is made in a divorce case, all “available sources of income,” including potential withdrawals from equitably distributed IRA and retirement (“Qualified”) accounts should be included (Niederman v Niederman 60 So.3D 544)  These cases have held that even if the recipient is under age 59 ½ and not normally eligible to make a withdrawal without a penalty they may do so using an exception to the normal rules under IRS rule 72(t). The exception in rule 72(t) allows the holder of an IRA or qualified retirement account to make distributions without penalty provided that those distributions are made as a series of substantially equal periodic payments and continue for the greater of 5 years or until the participant reaches age 59 ½.

IRS instructions on using a 72(t) distribution can be found on the IRS website:

http://www.irs.gov/retirement/article/0,,id=103045,00.html#/

Fortunately, the court ruling in Niederman V. Niederman only requires the distribution of earnings on retirement accounts and not the invasion of principal. In that case, both financial experts agreed that a 5% withdrawal rate would not require invasion of principal. Ironically, that case was concluded in 2008 and could not have foreseen the significant declines in the equity markets or the low interest rates we experience on deposits today.  From the prospective of a financial planner, the ruling makes little sense in calculating income. As a practical matter, almost none of our clients choose to draw income from their retirement plans before age 59 ½ and many clients choose to delay those distributions as late as possible until age 70 ½.  The ruling, like most of the laws regarding alimony in Florida, also fails to take into account the effect of inflation on future income needs.  While 72(t) distributions may have a waiver of the penalty of these withdrawals, taxes are always due on these distributions at the time they are made (Roth IRA’s are excluded if the rules are followed).

If we have historic inflations rates of close to 3% and investment returns on a conservative portfolio could average 5%, then the “safe” net withdrawal rate of income on these accounts should be closer to 2%.  Again, as a practical matter, many divorced women are not in a position to take risk with their portfolios and with current rates on fixed income investments at mutigenerational lows, even using a 5% return calculation is aggressive. The conclusion that I draw from these observations is that using rule 72(t) as a source of calculating income available to a divorcee places a significant burden on the non-working spouse and creates a situation where they may easily outlive their income.  Other court rulings have included the finding that alimony payments may not contain a “savings component” even if this was the standard practice during the marriage. I would argue that including an index for inflation in alimony calculations is not a reflection of savings—it is a reflection of reality. Inflation will happen and portfolios will need to be invested to take inflation into account.

Florida Statute 61.082(g) requires the use of “all sources of income available to either party.” There is little question that this issue will continue to be litigated unless there is a change in Florida Statutes that eliminates qualified assets as a “source of income.” While it makes a compelling argument from the spouse who is compelled to pay alimony, it does not make sense as a long-term financial strategy for either party. The courts have also indicated that the ruling cuts both ways and that the payor spouses’ “ability to pay” should also include using 72(t) distributions as a strategy for calculating available income. While it appears that current case law states otherwise, it would be difficult to find many financial professionals who would advise their clients to make pre-59 ½ distributions from their qualified accounts to pay for anything. Rarely is that a prudent financial or tax strategy.

Other Cases relevant to the 4^th District Court of Appeals in Niederman:

Donoff v. Donoff              940 So.2d 1221

Mallard V. Mallard           771 So.2d 1138

Diffenderfer v. Diffenderfer 491 So.2d 265

Castaldi v. Castaldi           968 So.2d 713

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax or legal professional regarding their individual situation.  IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code; or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Divorce attorneys are familiar with the statistic that the overwhelming majority of divorce cases are settled before trial.  If so many cases are resolved prior to trial in the traditional adversarial method of divorce, then why would anyone desire to use collaborative process law as an alternative to the usual adversarial method of dissolving marriages?

Most people in Palm Beach County and elsewhere don’t realize that the majority of divorce cases are either settled because of the threat of trial and on the eve of trial.  Divorcing couples often settle their cases because one or both parties are either emotionally exhausted and/or financially exhausted.  Either way, the parties cannot proceed.  In the adversarial system, information is not shared freely.  Spouses also may develop a pattern of adversarial interaction and oftentimes they relate to one another out of mutual concern and fear.

As a result, agreements are often reached under considerable tension and anxiety and relationships are damaged and family units may be negatively impacted.  Under such conditions, divorcing spouses often experience buyer/seller’s remorse at the conclusion of their negotiations.

In contrast, divorce cases using the collaborative process are generally settled sooner and are much less costly than the traditional adversarial method.  The collaborative process divorces require a respectful environment where the participants are involved in problem solving in the context of interest-based negotiation.  As a result, their interactions are far less stressful and they develop a pattern of interacting with one another in a respectful and cooperative fashion.  This develops a pattern of interaction that divorcing couples continue subsequent to their divorce.

As a result, each spouse can bring emotional and legal closure on the issues of the divorce and transition into the next aspect of their lives in a far more meaningful and healthy fashion.  Given these alternatives, many divorcing spouses will find the collaborative process far more beneficial to them in every aspect of their life.

This famous Yogi Berra quote about baseball holds equally true when it comes to dissolution of marriage.  You may think that it will all be done once you attend your final hearing or trial, and receive your Final Judgment of Dissolution of Marriage signed by the judge, but that doesn’t necessarily mean that your work is done.  There can be many loose ends which, if not properly tied up, could potentiallycreate costly and time consuming problems when you are recently divorced.

People who are divorcing or who have recently divorced should, if they haven’t already done so, review their Will, Trust, Durable Power of Attorney, Designation of Healthcare Surrogate, Living Will, Designation of Pre-Need Guardian, and other estate planning documents with their estate planning attorney, to make sure that all of these important documents, and the persons and instructions set forth in them, are still consistent with their wishes and best interests in light of the divorce.  If you don’t already have these documents, you should consider getting them.  A careful review of all pensions and other retirement plans, as well as all investment accounts, bank accounts, brokerage accounts, IRA’s, Certificates of Deposit, financial institution accounts, and similar accounts, should be made to assure that all beneficiary designations are still consistent with your wishes, your estate plan, your marital settlement agreement, the ruling of the court, and your potentially changed tax circumstances.  Also, many pensions and retirement vehicles require specialized court orders to effectuate a transfer of interests, and a delay in obtaining such specialized court orders can result in costly surprises.

A review of life insurance policies should be made to determine if you have a changed need in benefit amount, and if beneficiary designations are consistent with your wishes, as well as with the terms and requirements of your marital settlement agreement or Final Judgment of Dissolution of Marriage.  Many families have contributed to pre-paid College Plans and 529 Plans to provide for the future college education of their children.  Most such plans have a designated owner, designated survivor, and the children as designated beneficiaries, and these designations may need to be changed to reflect your agreement with your former spouse, the ruling of the court, and the change in circumstances. If you are recently divorced, check these documents.

You may have credit cards, debit cards, or other charge cards that have rewards programs associated with them.  These valuable rewards, points, miles, credits, etc., may have a limited period of transferability after divorce, or may not be transferable at all.  The same holds true for many frequent flyer and frequent guest programs, so you should discuss with your divorce attorney all of the programs in which you and your spouse participate, and act promptly before and after your divorce to make sure that you do not lose your interest in these valuable benefits.  Having all or some portion of them awarded to you in your marital settlement agreement or the court’s Final Judgment is often not enough to assure that you receive them, and many programs require both spouses to sign transfer documents, if transfer of these benefits is permitted at all.  Act swiftly to preserve your interest in these programs.

Though not a comprehensive list of all the things you should be reviewing as your divorce nears or has achieved its conclusion, these items are some of the more common, yet easily avoidable, pitfalls on the path to starting over and achieving a new beginning following divorce.

Ronald L. Bornstein, Esquire, is an attorney and frequent lecturer on Florida Marital and Family Law.  His practice includes contested and collaborative family law cases throughout the State of Florida, with offices in Palm Beach County.  He is a member of the Executive Council of the Family Law Section of the Florida Bar, serves on numerous Florida Bar Family Law Section Committees, and has been practicing for more than 23 years.  To learn more about him and his practice, email him at trialguy(at)aol.com.