Divorce Support, Pre DivorceSeptember 30, 2020

What is Community Property?

Texas is one of nine Community Property states, which essentially means that any property acquired during marriage is equally owned by both spouses.  Sounds simple, right?  Far from it. An important thing to keep in mind about property division during divorce is that it may not end up an equal 50/50, even though you are in a community property state. There are so many more moving pieces and often there are assets on the table to divide that can’t be severed down the middle, like a house.

For this article I am going to focus on two different types of property, marital and separate. We defined community property above, everything acquired during the marriage is considered marital and owned equally. What if you have property that you brought into the marriage or was gifted or inherited during the marriage, then what?

Let’s start by defining separate property.

Separate property is anything that was owned before marriage and kept in separate name, gifted, or inherited during the marriage and kept separate. Some examples would be an inheritance that was never put into an account or titled in both spouse’s name, or a savings that you had before marriage and never moved into a joint account. Seems straightforward.

Anything that is not deemed separate property is considered marital property and up for division.

As you begin to either plan or go through your divorce you want to make sure you are very clear on what is marital and what is separate. If you have a separate property claim it is best that you have evidence to back up that claim. There are additional nuances you need to be careful with here, commingling or combining separate with a joint asset, and/or separate property that has any income attached to it.

For more clarity and understanding on exactly how these factors affect your situation contact our Certified Divorce Financial Analyst® at Next Step Divorce Solutions.

Author – Tessa Elrod, CDFA®

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Divorce Support, Post DivorceSeptember 25, 2020

Finding a Career After Divorce

I recently had the opportunity to interview a successful female business owner. Through our conversation I discovered how and why she started in her line of business.  What caught my attention was not that she had an overwhelming passion for the work, which isn’t a bad thing, but that it started as a solution to a problem.  This woman now owns a growing insurance agency, but it all started because of some key factors. First, she was looking for her next move after working inside the home,  she was intrigued that the previous owner seemed to have the flexibility to be present at school volunteer functions, and she had growing children so learning about auto insurance seemed like useful information at that time.

Why do I tell you this?   I believe there are some valuable tips we can learn from other women that have stepped outside of the home or temporary jobs and built successful careers. In many cases women face more struggles after divorce because they find themselves having to make more life changes than their ex-spouse.  In Texas it is uncommon to see spousal maintenance and even more uncommon to see it last for any real length of time.  So, if you find yourself near the finality of your divorce or recently divorced and needing to find work consider these tips:

  1. Give yourself some grace! People do not commonly become successful business owners or build big careers overnight, there were baby steps. Start with step one.
  2. Define your priorities and the lifestyle you want to create for yourself. For just a minute think beyond the dollars you need to earn. What are the things that come to mind? (ex. flexibility, routine, growth, increased knowledge)
  3. Pay attention to those around you that emulate the lifestyle you are seeking, what is it that they do, is it something you could do down the road, and if so where do you start?

There can be success and growth after divorce. Focus your attention in front of you, not behind, find a direction and then learn what initial baby step you need to move in that direction. Taking that first step is scary, but you never know where it could take you unless you try.

Contact Next Step Divorce Solutions to learn more about preparing for your next financial move after divorce.

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Divorce Support, Pre DivorceSeptember 21, 2020

Financially Preparing for Divorce: Knowing your Spending Habits

Do you know what you spend each month on bills and basic living expenses? Have you ever kept a budget or paid the bills?  If the answer is no, you are not alone. Most people I speak with have a minimal understanding of their spending habits, and for many women in divorce this is a common trigger for their fear. 

Managing a budget does not have to be scary or overwhelming, you just need to find the right resource and tool to help you.  Start by looking back at the last three months of expenses to begin building your average expense in each spending category.  In our current world of unlimited applications there are several budgeting apps that do most of the leg work on tracking for you. If you prefer to write it out yourself, then excel will be a useful tool for you. The biggest hurdle to overcome in building a spending plan is first knowing what you currently spend, and I mean identifying where every dollar is spent.

With a clear understanding of your spending needs you now can answer some major questions during your divorce.

1. If you are hoping to receive spousal maintenance, you now have a clearer picture of your need

2. If you must find a new job you can now determine the salary you need to manage your lifestyle

3. You can clearly determine areas of your spending that can be reduced or cut out completely to better manage any reduction in income.

In divorce, one of the hurdles may be that you don’t have access to the bank account or credit cards to understand what you have spent in the past. This is something a Certified Divorce Financial Analyst® (CDFA®) can help you work through. A CDFA® can also help you to understand what other income sources may be available to you through your divorce, such as child and/or spousal support and marital property, to determine how you will continue to manage your budget once the divorce has finalized. Understanding your spending needs today and how they may change in the future will help guide some of your decisions throughout the divorce and provide clarity on how you will manage your financial future.

For more information on working with a Certified Divorce Financial Analyst® contact Next Step Divorce Solutions.

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Divorce Support, Pre DivorceSeptember 21, 2020

Can you Keep the House? What you Need to Know!

Guest Blog: by Anne Geske a Residential Mortgage Loan Originator with C2 Financial Corporation

Typically, when one goes through a Divorce, they only ever hire an attorney. Unfortunately, they do not think about having a Team of Professionals to assist them in making sure they are protected in all areas of their finances. Attorneys focus on the assets and liabilities and dividing them between both parties. Emotions run strong in many divorces and many times one party has their heels dug into keeping the home no matter what. If the home is awarded to them, the other party will make a demand to refinance the home within a certain time frame or sell the home. This demand is made to get that person off the current mortgage and Title of the property. Many times, you are required to refinance and give the other party money to buy them out of the property. That all sounds good but some of the things to think about are:

1. Am I working, and will I be making enough money to support the new payment, taxes, insurance, HOA and maintenance on the home when it   is time to refinance?

2. What is the current value of the home? Is there enough equity to buy the other person out and what are the consequences to taking the cash out of the property?

3. If I don’t need to take cash out of the property, is there enough equity to do the refinance and include the closing costs affiliated with a refinance?

4. If I am the one to stay on the mortgage and title until the other party refinances, will I be able to qualify for another home should I decide to buy?

In some cases, I will see one party coming off title and staying on the mortgage with a demand that the other person refinance within a certain time frame. This is not a good idea as Title shows ownership and being on the mortgage shows vested interest only. You do not want to be responsible for a loan and not even own the property. In addition, by remaining on the loan, you are taking a chance that the other person may or may not pay the mortgage payment on time. It is your credit that can be destroyed if the other person is careless and does not make the payments on time. Missing a Mortgage payment is the “kiss of death” to anyone’s credit.

The bottom line is that it is very important to meet with a Mortgage Professional prior to finalizing your divorce. It would be a shame to petition for the home only to find out that you need to sell it in the end. Once a divorce is final, there is no going back.

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Divorce Support, Pre DivorceSeptember 21, 2020

A Virtual Divorce During Coronavirus (COVID-19)

Are you ready to break free? After weeks and weeks under a stay-at-home order you may have hit your breaking point, several times, with your kids, your spouse, and the complete inability to just get away. These times are not easy and many of us are having to navigate challenges we never imagined possible. If you are contemplating divorce but don’t know where to start amidst stay-at-home orders with closed courthouses, consider these steps to begin.

First and foremost, recognize that this period during COVID-19 is hard for almost EVERYONE across the globe. You are not alone! If you feel your family relationships are struggling because of the strain these times have caused, I strongly encourage you to seek out a therapist that is willing to schedule virtual meetings. Even if that means you escape to your favorite nail salon or retail store parking lot for a little bit of privacy to have a virtual conference with a counselor, do it! We may all need a little therapy after this experience.

Second, start doing your homework. You are stuck at home and have nowhere you need to be, use this time to get your ducks in a row. The most important first step is making sure you have a good understanding of your finances. If you are the non-CFO (Chief Financial Officer) spouse of your household, then start asking for information and learn what you can.  Contact a Certified Divorce Financial Analyst® to help guide you on what you should be gathering.

As you work on the finances begin thinking about what type of divorce you want and who you want on your team. My suggestion is to include a therapist or counselor, a Certified Divorce Financial Analyst®, a family law attorney and/or mediator. Begin to assemble this team. Even now, during COVID-19, these professionals are still at work and ready to serve you.

Each state, county, and court are handling all family issues a little different. You should be able to file for divorce in Houston, but your spouse may or may not be served.  Some states are completely shut down and only the legwork can be done because the legal process won’t start until later. A local family law attorney can help to clarify what your county courts are doing to manage divorce cases throughout COVID-19.

At Next Step Divorce Solutions, we address the financial fears and confusion our clients face during the divorce process and turn it into confidence and clarity. We are ready to serve you, contact us today for your initial strategy session to learn more.  

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Divorce Support, Post Divorce, Pre DivorceSeptember 21, 2020

Two Major Factors that Impact Divorce – Q&A with Family Law Attorneys

After more than a decade in the financial service industry, I have learned a lot about how emotions can drive investor behavior and how a lack of financial education can cripple an individual’s ability to successfully reach their goals. When I began working as a Certified Divorce Financial Analyst® I anticipated the possible challenges I might face, but it didn’t take long to recognize how the same two facets of decision making, emotions and lack of knowledge, can have such a drastic long term toll on an entire family unit when put into the divorce process.

Was it possible that my opinion was formed due to my experience and views from the financial service industry, or was there something to it? Who better to ask than family law attorneys; so, I contacted a few family law attorneys around the Houston area to see what they thought.

  • What is the biggest mistake couples make during the divorce process?

The overwhelming response to this question all centered around making emotional decisions and having unrealistic expectations about the legal process. Allison Mundy, Attorney and Founder of Mundy Legal Services PLLC, said that walking in with an attitude of “wanting my day in court” is not only a bad starting place but will ultimately cost clients the most money for very little or no trade off to the ultimate settlement. Hayley Hollands, Attorney with the Hunt Law Firm, said the most expensive words a client can say is “it’s the principal of the matter” and goes even further to explain to her clients that going to court is like “throwing a hand grenade into a family”. Nobody said divorce wasn’t an emotional process but choosing your responses to those emotions is up to you. A couple of the attorneys painfully explained that having that attitude only hurts the parties involved, and that includes any children, because in a city the size of Houston the judges have heard it all and are mostly unphased at the story or reasons behind the divorce decision. 

The other mistakes mentioned were aimed at the lack of preparedness and assuming that actions or attempts to hide assets would not be caught, or possibly have an influence on the outcome of the final settlement.

  • What should clients know or investigate before they call you?

As a CDFA® it was encouraging to hear from each of the attorneys interviewed, including Jennifer Casey, Family Law and Bankruptcy Attorney of the Law Office of Jennifer Casey, that it would be extremely helpful to have at a minimum the basic understanding of the financials. Based on this and other comments, it is so important to have a meeting with a Certified Divorce Financial Analyst® at the research phase of the divorce process. Having a CDFA® on your team early can provide huge benefits to the initial start of your attorney relationship.

Hayley Hollands added that having already thought and considered your post-divorce wants and needs can go a long way in providing meaningful direction in the settlement negotiations. She often asks her clients in the initial consult ‘what they want to get out of the process and/or what they need to be set up for their next chapter.’  

Outside of financial preparedness and thinking beyond the short term, we also discussed the importance of understanding co-parenting. This is such an important topic and common area of contention for any divorce with minor children. It’s important to recognize that co-parenting goes beyond age 18 and the best possible gift a divorcing couple can give to their child(ren) is working together as amicably as possible when it comes to parenting.

  • What are some realistic expectations about the divorce process?

Ms. Casey emphasized that every single case is different and that no matter how similar your case may be to someone you know; the final settlement can be vastly different. An outcome to a negotiation is not just about the facts of the case, it is largely driven by the parties involved. There is so much about the divorce process that is not common knowledge and each couple’s experience will be different.

Ms. Hollands tries to help her clients recognize the long-term benefits cooperation can have on the impact of their post-divorce relationships. This understanding can help to minimize the negative impact divorce has on children who are often stuck in the middle.

Some logistical expectations that were mentioned included Texas 60-day “cooling off period. This does not mean a settlement can’t be reached in that time, but it does mean that a decree can’t be finalized until the 60 days have passed. Ms. Mundy also pointed out the misunderstanding of a retainer.  Most attorneys that I have spoken with charge an upfront retainer; this retainer can vary from attorney to attorney, but it is often NOT the final or full cost. Be prepared that you will have additional bills due to your attorney before the divorce is all said and done. The more contentious the divorce the more expensive the attorney gets.

After speaking with each of these family law attorneys, as well as several others, I think it is safe to conclude that the root of many challenges faced throughout the divorce process come from emotions and lack of knowledge. Surrounding yourself with the right team can help to mitigate some of these challenges. I encourage you to seek out a family law attorney (consulting or retained), a Certified Divorce Financial Analyst®, and therapist or counselor. You may also consider working with a Mediator as well.

At Next Step Divorce Solutions, we help to turn your financial fears and confusion into clarity and confidence. Contact us to learn more.

For more information about the attorneys mentioned in this blog please visit their websites below.

Allison Mundy – https://www.mundylegalsvcs.com/

Jennifer Casey – https://www.jcaseylawfirm.com/

Hayley Hollands – https://www.familylawyerkaty.com/

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Divorce Support, Post Divorce, Pre DivorceSeptember 21, 2020

What is a Certified Divorce Financial Analyst® and When Should you Hire One?

There are two questions I am commonly asked after sharing that I am a Certified Divorce Financial Analyst®.

  1. Are you an Attorney?
  2. When is the best time to hire a Certified Divorce Financial Analyst® (CDFA®)?

Thankfully, the answers are simple.

  • Am I an attorney?

The answer is NO, I am not an attorney. I enjoy working with family law attorneys and they are a huge asset when going through a divorce, but I am not an attorney and I do not (nor can I) give any legal advice. 

When a couple enters a divorce, they are immediately asked to provide a basic financial affidavit attesting to the martial finances. That’s at the very beginning of the process! From there they will make one financial decision after another.

I am sure you have heard friends or others you know that may describe their divorce based on how much they think they won, whether it be with child custody or assets. The truth is very few individuals come out of divorce feeling as if they won anything, and many are fearful of how they will move forward financially.

As a CDFA® I bring my 10+ years of financial service experience to the forefront of the divorce process. Not only can I better help individuals understand what they own, valuations, and how or if the asset can be divided, but I provide confidence. Confidence that they know and understand the facts of their case and what they truly need to move beyond the final decree. With education and understanding my clients can make decisions clearly and without fear.

  • When is the best time to hire a Certified Divorce Financial Analyst® (CDFA®)?

As early as possible! Financial guidance is valuable at every stage of life. As you navigate any life transition, a financial advisor by your side can help you be more prepared for any challenge and minimize any mistakes. A CDFA® can guide you through the steps of how to prepare for divorce before you even file, walk with you throughout the process, and then make sure you have fully implemented the decree, leaving no loose ends. The added value to having a CDFA® early on is making sure all the appropriate financial documents are requested or gathered the first time. While your attorney focuses on fighting for your legal rights, helping you to understand the law and how it is interpreted in your area, your CDFA® is fighting for your finances and making sure all items are in order before any finite decisions are made.

For more information about working with a Certified Divorce Financial Analyst® contact Next Step Divorce Solutions.  

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Divorce Support, Post DivorceSeptember 21, 2020

Don’t Forget the Cool Down: Post Divorce Action Items

With the emotional and physical exhaustion that encapsulates the divorce process, it may seem like getting across the finish line is nothing short of running a marathon. However, it’s imperative that you don’t skip the final step of the process, your cool down. After any workout or race it is important to catch your breath and then cool down, walk, and stretch before moving on to the next thing. Same goes for the divorce process. Your cool down should include several items necessary to fully implement your divorce, so you don’t find yourself in a mess tying up loose ends year’s down the road.

A couple of those important post-divorce items are outlined below.

  • Updating Estate Documents

This is often the most overlooked step after divorce. Statistics show that many married couples have already gone years without properly obtaining important estate documents like a Will, power of attorney, and medical directives. Don’t assume that if you have no kids, or little in the way of assets, that you don’t need estate documents. They are extremely important as a single individual or if you are stepping into a second or third marriage (check out a previous blog ‘Most Overlooked Mistake Post Divorce’ (https://nsdivorcesolutions.com/blog/most-overlooked-mistake-post-divorce) for a more detailed example of the pitfalls of overlooking this step).

  • Establishing your Own Financial Identity

I find that many of couples have most, if not all, accounts and debt listed under one spouse’s name. The danger in this setup is that now the other spouse, most often it is the wife, walks out of the marriage with limited or no credit history. Unless you are Dave Ramsey and plan to pay for everything in cash, it will likely be necessary to show good and available credit to make a purchase at some point in the future. To establish your own financial identity, you can apply for a credit card (just make sure you pay it off each month) and open bank accounts in your name.

  • Update Beneficiary Designations

This step could fall under #1 but is important to highlight on its own. Make sure to notify your insurance companies and remove your ex-spouse as beneficiary (unless mandated in the decree that they would stay on as beneficiary). Also be sure to verify that you have reviewed and updated beneficiary designations on all retirement accounts.

There are also plenty of other steps that should be included as part of your post-divorce action items. If you are working with a Certified Divorce Financial Analyst® they can assist you with that process.

For questions or more information please contact Next Step Divorce Solutions.

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Divorce Support, Pre DivorceSeptember 21, 2020

3 Things You Can Do to Prepare for Divorce During COVID-19

Have you ever been asked “where were you on 9/11”? We are all familiar with the famous “where were you” question after major events, so I anticipate years from now we will begin asking each other and our children “where were you when they announced schools were closed for Coronavirus”, or “what did you do trapped in your house for weeks on end?”  For some this may be the first time in a while to reconnect with their children and spouse, but for many others it may be the final straw for a marriage that was already suffering.

As news that China was finally ending its months long fight with the virus and individuals were able to start returning to work, news came out about increased divorces. As the United States continues to brace for the inevitable peak of the virus, two growing statistics have already been talked and even joked about; the rise of babies that will be born in 9 months and the expected increase of divorce filings.

If you happen to fall in the latter group, believing you will likely file for divorce when this is all said and done, then I would encourage you to take this time and use it wisely.  Here are a few things you can start doing now:

1. Gather information

With some extra time at home, it is a great opportunity to begin collecting your financial information. Even if you have been the one to handle the finances, take this time to organize statements, find out where accounts are held, detail out your budget, and pull your credit report to find out what debt is listed under your name, etc. For guidance on how to prepare financially, contact a Certified Divorce Financial Analyst® with Next Step Divorce Solutions for assistance.

2. Learn about your divorce options

In Texas you have multiple ways you can go about getting a divorce. The most common is through the litigated route utilizing separate attorneys, but this is not the only way. Consult a local family attorney or Certified Divorce Financial Analyst® to learn more about your options and what might be the most appropriate solution for you and your spouse. 

3. Begin building your team

In my experience one of the biggest mistakes that individuals make throughout their divorce is not building the proper team to support them.  That team should include a family law attorney, whether retained or consulting, a Certified Divorce Financial Analyst®, and a therapist or counselor.  With a team built of all three components you will get the guidance that affects all facets of the divorce process – legal, financial and emotional.

Nobody prepares or expects a world pandemic that will shut down ‘life as we know it’, but that doesn’t mean you can’t use this time to your advantage. For each person that could mean so many different things, for you that may mean preparing for divorce. For additional guidance on how you can begin preparing yourself financially and understanding how to avoid some mistakes along the way please contact a Certified Divorce Financial Analyst®.

To learn more about the benefits of hiring a Certified Divorce Financial Analyst®, contact us at Next Step Divorce Solutions. We look forward to providing education and guidance to help you turn your confusion and fear into clarity and confidence.

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Pre DivorceSeptember 21, 2020

How Preparing for a Rainy-Day Fund Could Save Your Marriage

It is extremely common to hear that people have more debt than they can keep up with, that they live on credit and paycheck to paycheck. In the initial panic of COVID-19 the fear wasn’t just of the virus, it was the inability to work and maintain a paycheck. Why??? Because when you live paycheck to paycheck, you likely don’t have a rainy-day fund and believe it would be impossible to ever save for one. What if I told you that was a lie, and in fact, you could create savings and grow your rainy-day fund. All it takes is a little discipline and time.

Now, let’s say you believe my truth and you start by analyzing your spending and cutting out the unnecessary expenses, even the tiniest ones. Next, you start a new account with an automatic deposit of just $25 a month, then after a couple of months you realize you never missed that $25 so you double it, and so forth and so on. Over time you begin to amass a rainy-day fund. With discipline, patience and time it is possible.

What if you used the same approach in your marriage? Instead of cutting expenses, you’re cutting noise and wasted time. Instead of an auto savings, you regularly serve your spouse and/or make time for a date night.  You learn to become intentional with the time you have and how you use it. Over time, with discipline and patience, there is a chance you might find your relationship growing.

If you have ever read the book ‘Fireproof’ written by Eric Wilson or watched the movie, you saw that the initial behavior or response change can be misunderstood. Changing our budgeting habits doesn’t happen overnight and they don’t always go as planned, but with time and consistency changes can begin to manifest. The same can be true for your marriage if you and your spouse are both willing.

If you are like many that are going stir crazy in our COVID-19 social distancing era, a good use of time could be using this opportunity to work on your marriage. All the ‘noise’ of life and busyness has been forcibly removed for you. Take the time to analyze what areas you have found could be carved out after we get back to normal, and how that time can be intentionally used to serve each other.

The key is staying focused on what you can control, that is you and your response only. Marriage takes work and both spouses willingness to give 100%, not just 50/50. Life may throw you a pandemic, and stop life as you know it, but what you choose to do with it is up to you.

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