Breadwinner Moms: The rise in women paying spousal support

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Breadwinner Moms

Do women pay spousal support?

Absolutely! Women pay spousal support and it is becoming more prevalent as women continue to make advancements in career and compensation (sometimes known as Breadwinner Moms).

Most compensation studies in the United States point to gender gaps in compensation between men and but women are still working more and making more money than ever. Women now make up 47% of the workforce and employment rates for married mothers are up from 37% in 1968 to 65% in 2011. Our modern economy has created more dual income families than ever and the number of women acting as the main bread winner in their household has increased dramatically.

Breadwinner Moms

29pew-web1-popupA Pew Research Center study from 2013 titled “Breadwinner Moms” found 40% of all households with children under 18 years old boast mothers as either the sole or primary breadwinner in the household. Compare this 40% to only 11% in 1960. The study was based on analysis of US Census data. It is important to recognize one major factor in these figures. 67% of those Breadwinner Moms are single mothers. Only 37% of them are married. This factor is important because the single mother cohort has a median income of only $23,000 versus the married cohort with a median income of $80,000. The married Breadwinner Moms are making more money than their husbands and more money than the national median which makes them very likely to be in a position of the spousal support payer if they were to divorce. This means there are 5.1 million women in the United States who will likely end up paying spousal support (alimony) to their former husbands in the event of divorce. Thanks to these encouraging demographic trends more women pay spousal support than ever.

What about gender preference?

If the husband can demonstrate a reasonable need for spousal support and his ex-wife has the ability to pay, then he is a good candidate for spousal support. The law has no room for preferential treatment of one gender in divorces so there should be no consideration of the support recipient’s gender in setting spousal support.

Having said that we have some observations to share from our experience working with Breadwinner Moms and their spouses:

 

  1. Women are likely to fight harder than their male counterparts to avoid paying their former spouse long term alimony.
  2. Men are more likely to refuse spousal support because they may feel it is emasculating.
  3. Women often expect their former husband to “take care of himself” after divorce.
  4. Some Men still believe it is bad for their wives to out-earn them during marriage and this may even be a central theme as to why the marriage ended. This feeling is quickly disappearing and i am sure would quickly disappear if the men knew households with the woman as the main bread winner earned higher average income compared to those households with men as the main breadwinner.

 

Bottom line, there are still many traditional gender roles at play.

 

Wellspring Divorce Advisors offers the creative options, financial analysis and strategies necessary to ensure you obtain the most financially advantageous settlement possible. Click here to find out how we can help you!

Hidden Assets in Divorce Panama Papers

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Clients of Wellspring Divorce Advisors regularly express concerns about hidden assets in divorce proceedings. Often trust has been lost thanks to an affair and it is easy to take the next step and believe one lie makes it likely there are others. In most cases a Certified Divorce Financial Analyst at Wellspring can either confirm or deny these client fears through forensic review of financial records but the realizations found in the Panama Papers have proven it may be possible to hide assets. At least for a while.

The Panama Papers, published the International Consortium of Investigative Journalists or ICIJ, reveal

  • Offshore companies used ‘in a game of hide and concealment’ after marriages break down
  • Documents list luxury cars and yachts, lavish homes, and art collections
  • Spouses face a costly battle to prove ownership of offshore assets in protracted divorce proceedings

The ICIJ published a story “How the One Percenters Divorce: Offshore Intrigue Plays Hide and Seek with Millions” in early April of 2016. Most of the names revealed in the papers are international but the South American location of the law form involved does not render American citizens immune to the frauds perpetrated.

Concerns for hidden assets in divorce are common and widespread. If you share these concerns you must ask yourself; How much is the peace of mind worth? The peace of mind to know your spouse did not defraud you in the divorce proceedings. The peace of mind to know you got what you were owed in the financial settlement. There are ways to uncover hidden assets in divorce if you have the time and money to pursue it. We suggest you work with your Wellspring Divorce advisor and your attorney to look at the cost versus benefit of doing so and make your decision on how to proceed with the professional advice in mind.

Divorce Costs how much?

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It depends on the situation; for example, if you have substantial or complicated assets your divorce cost may be higher. If you own a small business and take liberties with deducting your personal expenses as business expenses on your taxes your divorce cost will be higher. If you or your spouse have significant separate property claims your divorce cost will be higher. If you cannot have productive and respectful discussions with your spouse your divorce cost will be higher. In our experience the most expensive divorces are fought by two parties who HATE each other for one reason or another. Sadly the legal system is structured in a way leaving these two hateful individuals more angry at the end of the process than they were at the outset. It also depends on the attorney’s hourly rate and if he or she is inclined to encourage a settlement. Hiring the most expensive attorney in town known for being a shark will increase you divorce cost.

Wellspring Divorce Advisors coaches clients to think of their potential divorce cost as a continuum from highest to lowest rather than absolute dollar terms. Click here for a brief overview of your main options from proceeding or call us for an overview and consultation to help you choose. Our experience has shown the engagement with Wellspring Divorce Advisors will reduce your overall cost significantly.

Ranked below are your process options ranked highest to lowest in cost. We have seen litigation cases cost millions of dollars in fees and mediation cases with equivalent amounts of assets done for $15,000.

  1. Litigation
  2. Adversarial with Settlement
  3. Collaborative Divorce
  4. Mediation
  5. Pro-Per

Caveat: A failed mediation can easily land you in a litigation model and cost even more. Make sure you understand mediation before opting in. The model is often misunderstood and full of less than reputable professionals.

Temporary orders for money in divorce

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Temporary orders are usually issued regarding child custody, child support, spousal support and use or possession of assets. They cover the time period between the time that the divorce petition is filed and the time that the judgement of divorce is issued. Orders of any type are legal matters requiring the attention of legal counsel. Wellspring Divorce Advisors requires all of our clients consult with legal counsel to make sure they understand their legal rights and obligations.

Divorce is not a fast process. It is a legal, emotional and financial process often lasting years from the date a petition for dissolution is filed. Because of the often long periods of time passing between petition and judgment the court is often asked to make temporary orders on certain pieces of the case. Temporary Orders are important from a financial perspective because they are designed to protect the parties from risks that appear during pending dissolution proceedings. Risks might include a full time mother and homemaker being cut off from family bank accounts and by extension unable to pay bills. They may be entered for the sole purpose of providing clarity and guidelines to parents as to their obligations to support minor children. There may also be reasons to make orders for a party to continue supporting the costs of a marital asset in order to protect credit scores. Temporary orders could also be used in situations where extensive financial data gathering is under way and the court simply lacks complete information to make longer term decisions.

Following are some examples of temporary orders related to finances we have seen in our practice. We have provided links to California self help websites where possible.

  1. Order for Temporary Alimony or Spousal Support – A temporary order for alimony is often entered to ensure both parties have the ability, to the extent possible, to maintain the marital standard of living they enjoyed during marriage. At the very least the temporary order is put in place to provide necessary funds to a non-working or lower earning spouse to support themselves during pending litigation or settlement discussions. In California the amount of temporary alimony will usually be calculated by a computer program called Dissomaster based upon historical and current incomes of both parties. Note: Temporary spousal support is almost always higher than long term spousal support in our experience.
  2. Order for Temporary Child Support – A temporary child support order provides necessary funds to a non-working or lower earning spouse to support the expenses necessary to support minor children. The amount of temporary child support will be based upon the incomes of both parties as well as the needs of the children. If, for example, the children have special needs or attend private schools, orders may be entered to cover the associated expenses of specific items.
  3. Order for Sole Use and Possession of the Marital Residence – In more contentious cases parties may argue over who should move out of the marital residence during the pending litigation. It may be necessary in this case to grant one party sole use and possession of a marital home on a temporary basis while litigation or settlement discussions proceed.
  4. Automatic Temporary Restraining Orders – in most jurisdictions the filing of a petition for marital dissolution in accompanied by temporary orders restraining either party from selling, encumbering or otherwise disposing of an asset. The orders may also restrict you from changing beneficiaries on insurance or retirement funds.

 

Am I divorced or married this tax year? What is my tax filing status in year of divorce?

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You are considered divorced if you took status as a single individual before December 31st of a given tax year .  You determine your tax filing status based on your marital status on the last day of the tax year, which is December 31 for most individuals.  Sometimes it actually makes sense to postpone your date of status until January 1st of the following year if it saves tax dollars.  You must agree with your former spouse to postpone the date of status and file married jointly but it may be worth it to both of you to reduce your tax bill during the period to offset legal fees from the divorce. It pays to be negotiable on tax issues. Wellspring Divorce Advisors can help you work with your spouse to determine the most advantageous filing status for your family in the year of your divorce.

We are posting lots of tax related items to the blog in honor of our upcoming speaking engagement at the California Society of Certified Public Accountants Annual Tax and Accounting Institute in San Diego November 18th. We are honored and looking forward to speaking to hundreds of CPA’s from across Southern California and giving them an overview of the many traps and opportunities inherent in the tax code during divorces.