First meeting with divorce attorney: How can I prepare?

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divorce attorney

You can save a lot of money on attorney fees if you are organized and provide your divorce attorney with concise and complete information.  Here are some tips on how to prepare for your first meeting with divorce attorney.

Be prepared to discuss your marital problems with your divorce attorney but keep it concise and honest.

  • The longer you talk about the the lies, affairs and financial disagreements that ended your marriage, the longer your meeting will take and the more it will distract from the legal aspects and business transaction of your divorce proceedings. Talk to your mental health professional if you need a more emotional connection. Talk to your financial expert if you need assistance understanding the family finances and planning for your future. Do your best to simply state. Why, in your honest opinion, your marriage has come to an end.
    • Romantic infidelity?
    • Financial infidelity?
    • Financial Disagreements?
    • Life review?
    • No longer in Love?

An idea of what you want to get out of the divorce proceedings financially.

  • If you do not know what you want; Wellspring Divorce Advisors can build a plan for your financial future and communicate the results with powerful analysis and reports.
  • Some examples
    • Keep the House – Can you afford it?
    • Financial Security – What does this mean to you?
    • Long term spousal support
    • Not to go back to work
    • Children’s college education paid for
    • Financial autonomy
    • Purchase a new home

You should bring the following information to your first meeting:

  • Family information, including the names and birth dates for yourself, your spouse, and your children
  • The date and place where you were married
  • Current employment information for you and your spouse
  • An estimate of financial status including
    • Income (current pay-stubs and last three years tax returns would be best)
    • Expenses (if you have a budget bring it, if not let us know and we can help you prepare one)
    • Assets and Debts (account statements for mortgage, 401K, brokerage accounts, bank accounts, credit cards)

 

We suggest meeting with a Wellspring Divorce Advisor before or immediately after your first meeting with divorce attorney. We will help you put together a complete and detailed picture of your family finances before the attorney heads down the path of expensive formal discovery. We can also help you choose the right attorney and divorce process if you do not yet have one.

Dependency Exemption Non-Custodial Parents

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The Internal Revenue Service released a memorandum in 2009, clarifying the rules governing non-custodial parent’s ability to claim a dependency exemption for their child.

Previously, the Service allowed a non-custodial parent to claim an exemption for a child if the custodial parent signed a written declaration releasing claim to the exemption and the non-custodial parent attached that declaration to their return. IRS Form 8332 is available to document this release.  In Publication 501, Exemptions, Standard Deduction, and Filing Information, the Service has stated that a non-custodial parent may attach certain pages of a divorce decree or separation agreement, instead of Form 8332, if the attached pages include the information required on the form. Click here for more information from the IRS.

The Problem

A problem arose in the ambiguous language of the actual code.  It stated the release of a claim must be on Form 8332 or, if not on such form, must “conform to the substance of such form.” The ambiguity begat creativity and family law attorneys began drafting the declarations into settlement agreements. Taxpayers would then simply need to attach a copy of their divorce decree. This eliminated the need for Form 8332 and therefore, the need to speak to your ex-spouse every year requesting a signature.

The recent memorandum was directed specifically at the question whether it was allowable for a non-custodial parent to prove their right to the exemption by submitting proof of satisfaction of a condition in a divorce decree. The condition was that the non-custodial parent may only claim the exemption if current in his or her support obligation. This raises the problem of substantiation.

In the 2009 memo, the Service concluded the release must be on Form 8332 or must be a document conforming to the substance of Form 8332 and has as its only purpose the release of a claim to exemption. A divorce decree, separation agreement or parenting plan allowing a non-custodial parent to claim an exemption for a child, only if a condition is met, does not conform to the substance of Form 8332.  For tax years beginning after July 2, 2008, a settlement agreement, decree or judgment may not be used by a non-custodial parent to substantiate a dependency exemption for a child.

These regulations reflect the Service’s concern about substantiating a claim to a dependency exemption for a child and are intended to avoid problems of proof, minimize controversy, and minimize costs to parents.  The change does not preclude a non-custodial parent from claiming the exemption; it simply requires more care be made to make sure this is accomplished.

It may be helpful to include language stipulating the custodial parent will execute Form 8332 on a yearly basis. This follow up challenge can be alleviated by insuring the newly single parents consult a financial advisor with specific experience in the field of divorce financial planning. Two parents claiming an exemption for the same child will end in IRS audits for both and possibly bring a settled case back into the courtroom.

6 Financial Steps to Preparing for Divorce in 2017

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financial steps

Are you planning to divorce in 2017?

Take a look at our recommendations for 6 Financial Steps to Preparing for Divorce in 2017.

1. Keep an eye on the mail-box.

Every financial document that hits your mailbox in the month of January is worth your time. You should gather Bank and Brokerage account statements showing year end balances and the year end spending summary sent out by most Credit Card companies. You may also start to see tax documents being sent.

If you aren’t sure whether the document is pertinent to your Divorce in 2017, keep a copy anyway just in case. Financial knowledge will equal power for your Divorce in 2017. The more you can get now the more prepared you will be to advocate for yourself and obtain the most financially advantageous settlement possible in the new year.

2. Make copies of all financial files in your home.

This includes 5 years of tax returns, Brokerage and Bank account statements, business ownership documents such as partnership agreements and wills and trusts. Again, if you have any reason to believe the financial document will be important to your Divorce in 2017; you should keep a copy. It is always better to be over-prepared.

3. Educate yourself about your divorce options.

We believe most couples can resolve their differences outside of court. Make an appointment with a Wellspring Divorce Advisors advisor who will educate you about the process options available for your Divorce in 2017. Staying away from the court system will save emotional and economic resources and should result in a more advantageous financial settlement.

4. Consult with a lawyer or two or three or four.

Your Wellspring Divorce Advisors professional can refer you to many high quality divorce lawyers in your community. Concentrate your search on attorneys who specialize in Family Law. You wouldn’t go to your primary care physician for a tonsillectomy so don’t go to your real estate attorney for your divorce.

5. Develop a budget for your Divorce in 2017.

Divorce is hard on the checkbook. You will have expenses of two households, expenses to set up that second household such as furniture and furnishings. If you already have a family budget you can use this as a guide to start your individual divorce budget. If you don’t have one, begin by looking at the bank and credit card statements you gathered in steps 1 and 2.

First get a feel for the recurring expenses like mortgage and utilities then make estimates of discretionary expenses like dining out and entertainment after averaging a couple of months’ worth of real data gathered from the statements.Finding a way to maintain some level of a similar lifestyle during the divorce proceedings is not easy for most but this is a time for you to be comfortable, not feeling destitute.

Wellspring Divorce Advisors is experienced in creating budgets and available to assist clients in developing a budget for their Divorce.

6. Open a credit card in your individual name.

If you do not yet have a credit card in your name alone we suggest you apply for one immediately. It is common for one party to lose access to cash after filing for divorce. If you do not have cash you cannot pay the professional help you need to protect yourself in the divorce process.

Try Capital One for a good starting point. They usually provide good rewards such as airline or cash back on their cards as well as good size credit limits. Aim for $20,000 of total credit card limits. Be careful not to spend too freely on the cards and try to stick to just using them for professional fees if possible.

Real World Financial Infidelity – Skimming

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financial infidelity

What is skimming?

Skimming from marital bank accounts is the process of slowly transferring marital assets from joint accounts to a secret account in the name of one person. This version of financial infidelity may be considered outright theft and often requires the assistance of an unrelated third party.

Here’s an example of financial infidelity:

Years ago we had a client come to us after becoming suspicious of his wife’s spending habits. He knew something was fishy but wasn’t sure why. His wife spent very large amounts of money at retail establishments like department and grocery stores on her debit card. He became suspicious when he realized she never seemed to have large bags of new clothing and was purchasing groceries only for a family of three.

We completed a cash flow analysis from bank statements and prepared a list of possible avenues for financial infidelity. Principal among them were the large and abnormally frequent trips to grocery stores and Nordstrom.

Here’s what we found:

During our analysis we asked the client whether his wife typically carried around large amounts of cash. We were concerned she could be taking cash out every time she used her debit card at the grocery store. Many grocery stores will allow for $200 of cash to be withdrawn at the cash register on top of a bill for $18.99 in groceries. The total bill then looks like $218.99 was spent at the grocery store on a bank statement. It actually makes a lot of sense for stores to allow these cash back transactions because it helps reduce employees access to large sums of cash and reduces internal costs for accounting and balancing cash deposits.

We also wondered if the spouse could be taking advantage of cash refunds when returning purchased items to department stores. Many stores will give you the option to receive cash or a credit to your card if a debit card was used to make the original purchase. There is typically a limit to the amount of cash refunds they will provide but a small refund here and there can ad up quickly.

Where did the money go?

Once we raised these concerns the client was able to find tens of thousands of dollars of cash withdrawals made through these two methods by comparing receipts he acquired to bank statements. The only remaining question was…Where did the money go? It turned out the cash was being sent to her mother in a different state via US Mail and deposited into an account in the mother’s name. This was a smart move by the wife because the statements would never be sent to her and any interest earned on the account would be on her mother’s tax ID.

This type of scheme is not all that uncommon. A recent Harris Poll done on behalf of the National Endowment for Financial Education saw 26% of respondents admitting to hiding bank accounts or cash from their spouse.

Fortunately for our client there are ways to sniff out financial infidelity.

 

Financial Infidelity: How do I catch my spouse?

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financial infidelity

How do I catch financial infidelity?

1. Ask for online access to credit and bank accounts.

Download full statements for a representative period of time. We suggest at least six months. If online access is not available, get statements from the mail. Make copies for yourself, preferably electronic copies by scanning.

2. Review transactions and note:

  • large cash withdrawals and the location of ATM usage, you may be able to pinpoint the destination of the cash withdrawals if in close proximity to strip club as an example
  • large debt or credit transactions
    1. Location of restaurant, bar and hotel expenses. Large restaurant or bar bills could indicate your spouse was not alone.
    2. Large retail store expenses, say Tiffany’s, might be indication of gifts being purchased for someone else or spending addiction. If you suspect a spending addiction look around the house for clothing with tags still on it either in bags or even hanging in the closet.

3. Get your credit report.

It is possible for your spouse to open credit cards on your credit without your knowledge or consent. Go to CreditKarma.com or www.annualcreditreport.com to get a free copy of your report and look for any accounts you are not familiar with. If you find more credit cards than you were previously aware of this could be indication of large balances and growing indebtedness.

4. Compare your family expenses to net incomes and estimate what you should have in savings.

This may be the quickest way to confirm there are large amounts of missing money or unnecessary indebtedness. If your family’s net income after taxes is $10,000 per month and your expenses are $7,000 per month there should be $36,000 of available savings in a given year. If there is no money in savings or investments, you have reason to be suspicious.

 

Can anyone help me?

If all of these steps fail to return the answers you seek consider hiring a Certified Divorce Financial Analyst at Wellspring Divorce Advisors to analyze the family financial picture and uncover financial infidelity. We will help ensure no stone is left unturned and tell you if there is something to worry about you can move on with peace of mind.