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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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Divorce Support, Pre DivorceSeptember 21, 2020

“I want a divorce” – 5 Tips to Delivering the News With Respect (Guest Blog)

I’ll begin with what NOT to do! I was on the receiving end of this news in my divorce and my ex-husband really blew it. He was so afraid of how I would react, since he was also going to tell me he had been having an affair, that he planned it all out and asked me to have dinner with him at a restaurant so he could “talk to me” about something. He hoped that if I was in a public place I would be less likely to become hysterical.

For the remainder of the blog click the link below.​

https://smarterdivorcesolutions.com/i-want-a-divorce-5-tips-to-delivering-the-news-with-respect-2/
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Divorce Support, Post Divorce, Pre DivorceSeptember 21, 2020

A Divorce that Includes a Child with Disabilities: Part 2

Last week I outlined some considerations to be made in divorce negotiations as it relates to child support as well as child custody and your parenting plan when caring for a child with special needs. This week I will highlight spousal support and recordkeeping.

Spousal Support

Texas is known for not being friendly when it comes to spousal support, however if your child requires around the clock care which limits the main caregiving parent the ability to work and support themselves, then spousal support can be a tool to support that caregiving parent to continue that role. However, if the caregiving parent must work then you need to determine how respite care would be paid for, if not with spousal support.

Recordkeeping

As you negotiate your settlement be sure to bring all your child’s records to assist in the negotiation. These may include a care notebook, time each parent spends caring for the child, and a detailed list of all medical expenses. Properly structuring and negotiating your divorce agreement will be imperative to the care of your child with disabilities. There are resources available to aid you and your spouse through this process. I strongly encourage you to include a family law attorney, therapist for you and your child, estate planning attorney that specializes in special needs trusts, and a Certified Divorce Financial Analyst® (CDFA®) for financial guidance and coaching. For more information contact Next Step Divorce Solutions, LLC. 

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Divorce Support, Post Divorce, Pre DivorceSeptember 21, 2020

A Divorce that Includes a Child with Disabilities: Part 1

Entering the divorce process is scary and overwhelming for anyone but adding the complexity of caring for a child with special needs can be even more intimidating. There are additional complexities with child custody and finances that should be considered and spelled out clearly in your agreement. Some of those areas include child support, custody and parenting plan, spousal support, and recordkeeping. Over the next two blogs I will discuss some things to consider in each of these major areas.  

Child Support

Standard child support often ends at age 18 or when the child graduates from high school. However, in the case of a child with disabilities that financial support may need to last for the life of that child. There are state specific Medicaid Waiver programs that could minimize some of that financial support need, but those programs have very long wait list. It’s important to consider all scenarios when negotiating child support. If you are not familiar with Medicaid waiver programs you should contact your state Health and Human Services organization to learn more about what is available in your state.

It is also important to keep in mind that standard child support does not take into consideration extracurricular activities. When you have a child with disabilities those extracurricular costs turn into medical needs such as medications, therapy, or special equipment. You also should consider the caregiving costs, especially if one spouse is no longer able to stay with the child as much as they did prior to the divorce. 

Child Custody/Parenting Plan

Special care should be taken when determining child custody and your parenting plan. If your child will be unable to emancipate, there will be life changes you want to consider well beyond your child turning 18. Some of those include how you will handle guardianship, who will make decision about medical care and school, attend Admissions Review and Dismissal (ARD) or Section 504 meetings, etc. Some bigger changes to consider could be what if one of you moves out of the area and can no longer participate in daily care or one of you can no longer be the primary caregiver. Thinking through some of the what ifs is important to determine what you may need to define in your settlement agreement.

As you build out your parenting plan consider keeping detailed records that travel with your child. Note things like their therapy schedule, daily routine and medical needs and medication schedule. A parenting plan is imperative in any situation but could be life threatening for a child with disabilities if not taken seriously by both parents. If you are struggling with these issues bring in third-party counsel who has experience in these matters to assist you.

As you begin to negotiate these various areas of your divorce be sure to also consider and fully understand the ramifications of how these should be outlined in your agreement. One area is with Medicaid Waiver Programs, these services offer much needed help to families and are beneficial for higher income earning families because the eligibility is based on the child’s income. As you structure child support or any beneficiary designation you should consider a Special Needs Trust. Contact your local estate planning attorney that specializes in these types of trust to learn more. Properly structuring and negotiating your divorce agreement will be imperative to the care of your child with disabilities.

There are resources available to aid you and your spouse through this process. I strongly encourage you to include a family law attorney or mediator, therapist for you and your child, estate planning attorney that specializes in special needs trusts, and a Certified Divorce Financial Analyst® (CDFA®). For more information contact Next Step Divorce Solutions, LLC. 

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Divorce Support, Pre DivorceSeptember 21, 2020

3 Strategies for a Smarter Divorce

Divorce is overwhelming and downright hard! I have witnessed the grief cycle play out from moment to moment all while the woman along for the ride tried desperately to grasp at ropes…anything…to stop the ride and feel some semblance of what was once normal. Divorce, like widowhood, can be a cruel process. While you are grieving the loss of a life you once knew, you are also being forced to make quick and what seem like terrifying decisions.

So, what do you do?

You start by taking one step forward at a time.

FIRST, ADMIT WHAT YOU DON’T KNOW

What’s your role when it comes to the family finances? Do you handle the bill paying? Are you “in the loop” on all your bank accounts or are you in the dark? What about investment accounts or retirement plans? Do you have any? If you’re in the dark, you need someone to help you turn the lights on – and FAST! Begin collecting statements on all your asset accounts and your most recent tax returns.  Then find a CDFA® practitioner to help you and bring you up to speed. A CDFA® professional is specially trained in the financial aspects of divorce and will be your best friend in this process! He/she’ll clear out that brain-fog like a West Texas wind!

THINK ABOUT YOUR FUTURE

Of course, this will be hard, but start thinking about what the next phase of your life looks like. Unfortunately this has to happen at the same time that you are grieving what you THOUGHT the next phase was going to look like. But if you allow yourself some space, it can actually be fun. You now have the chance to start over again. What did you used to DREAM of doing that got lost while you were married? Is it time to go back to school? Maybe a small townhome should replace that huge family home that you had to keep clean. Whatever you dream of, you will need your budget and financial picture top of mind. That way, if your dreams outsize your wallet, you know you have some serious planning to do!

BUILD A SINGLE FINANCIAL IDENTITY

Often through marriage all the credit cards, mortgages, loans, etc. are in the names of both spouses. All of those accounts will have to be closed or converted. Immediately open a checking and savings account in your own name to begin the process of establishing your own financial identity. Be sure to put some things in place while you’re still married because after the marriage is over, your credit picture may not be nearly as strong. Next, find a good rewards credit card to apply for in your name alone so that you will be assured of having access to credit post- divorce and maybe even during if legal fees are necessary.

These steps seem small but are valuable first steps to get you thinking financially and looking out for your future. You can get through this, and a little help from a CDFA® friend is a great place to start.

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Divorce Support, Pre DivorceSeptember 21, 2020

Major Risk Women Have in Divorce

I have built a business on educating, informing and guiding women through the divorce process. So, it was no shock to recently read an article that highlighted how often women concede the family financial management to their husbands. The article outlined that 55% of Women over the age of 50 let their husbands take the lead on financial management. Surprisingly that percentage is not decreasing, but increasing, with 59% of women in the millennial generation following the same pattern. Generations of women have fought for equality but for some reason many of us have chosen to not participate in the financial affairs of our families.

Why is this so important? In a period of transition like divorce or widowhood women put themselves at a massive disadvantage by not having a healthy understanding of their family financials! In divorce the husband has a bit of a “leg up” because he has always known the financials of the family, whereas his wife now must play catch up. This dynamic throughout the divorce process causes vulnerability leading to fear of the unknown and the future, as well as added distrust in what the spouse is providing.

If you are walking through a divorce and are like so many other women, that did not manage the family affairs, then hiring a Certified Divorce Financial Analyst® (CDFA®) is imperative! It is so easy for emotions to take over and drive decisions that are then finalized in the decree. There is a better way! With a CDFA® on your team you have an opportunity to get up to speed on the current financials of the marriage in addition to an understanding of how post-divorce life may look financially. Your CDFA® will also provide an objective view and help you understand the long-term impact of your finite decisions. 

At Next Step Divorce Solutions, we empower women walking through divorce by providing the financial tools and education they need to make decisions without fear of the future. As a CDFA® we bring financial expertise to women in divorce, so they are not left holding the short end of the stick. Don’t delay, contact Next Step Divorce Solutions to help guide you through your divorce.

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Divorce Support, Post Divorce, Pre DivorceSeptember 21, 2020

What is a Qualified Domestic Relations Order and Do You Need One

You mean, there is more work to do after the final divorce decree is signed?!?!?

Yes, unfortunately the long process to get to your final decree is not the end. Once the decree is signed, now the actual work of separating the assets, as detailed in your agreement, begins.

I have heard over and over that individuals post-divorce have split everything, but there is one retirement account that they just haven’t messed with. Some investments do require a little more time, energy, and financial cost to split, such as ERISA covered plans like 401(k) plans, 403(b) plans, pensions, 457 plans, deferred compensation plans, some RSU, and restricted stock unit accounts. These types of plans require a Qualified Domestic Relations Order (QDRO) to be filed with the plan administrator.  Once the QDRO is submitted and the assets split, then the non-employee spouse can roll the funds to an IRA account for future management. Note: Even though an IRA is a qualified account, they do not require a QDRO; a signed divorce decree is sufficient documentation to split that account.

One of the special features that individuals have with a QDRO is a ONE-TIME opportunity to take a withdrawal in which taxes are owed but AVOIDS the 10% TAX PENALTY if the distribution is taken prior to 59 ½. This could be beneficial in providing some needed financial flexibility, but if not done properly you could miss that special window.

As a Certified Divorce Financial Analyst® our firm acts as a liaison to a local Houston QDRO drafting service. We can help aid you in the process, as well as make sure that you have defined if and how much of an up-front distribution you may need from the plan.  In Texas, if the QDRO is not started within 30 days of the decree being filed, a separate motion must be filed with the courts throughout the process. For this and many other reasons, such as a tracing nightmare, it is imperative that you complete the QDRO process as quickly as possible once the decree is finalized.

The QDRO process is not for the faint at heart and following a long divorce settlement process can be downright overwhelming. Contact us at Next Step Divorce Solutions, your local Certified Divorce Financial Analyst®, and we will help walk you through the QDRO process one step at a time to get everything done in a timely and efficient manner.

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Divorce Support, Post DivorceSeptember 21, 2020

Most Overlooked Mistake Post Divorce

Going through a divorce can be a whirlwind of emotion and confusion, and the process of dividing up and retitling assets after settlement can be just as chaotic! One piece that often falls by the wayside is making sure your estate documents are updated after everything has settled. This can include wills, trusts, and medical directives. The brief story below is a real-life case and an example of why making sure these documents are revisited can be so important.

For anonymity, we will name the couple Bob and Beth. Bob and Beth were married for 15 years and Bob had one son, Blake, from a previous marriage. Bob recently passed away from a sudden stroke in his early 60’s. Unfortunately, he did not have a will in place and both the primary home and family bank accounts were titled in Bob’s name only. Since he died without a will, anything that was not jointly titled with Beth will be left up to the probate court to decide how the asset(s) will be divided. (Some exclusions are things like life insurance or IRA’s that have a named beneficiary)

Under Texas law, since Bob died intestate (without a will), community property such as the family bank account in Bob’s name will be split equally between Beth and Blake, Bob’s son from his previous marriage. Any separate property will be divided 1/3 to Beth and 2/3 to Blake. This has made life very stressful for Beth as she tries to decide how to pay for funeral and burial expenses, as her primary cash reserve will not be passing fully to her.

This situation could have been avoided a few different ways; Bob could have held the bank account jointly with Beth or named her as a beneficiary using a Transfer on Death designation. More importantly, if Bob had special wishes as to how assets were to be divided up between Beth and Blake, that could have been accomplished through a will instead of leaving it up to the probate court to decide.

Revisiting documents such as wills and trust throughout your life, especially after a divorce, is critical in ensuring that your assets will transfer according to your wishes upon your passing.

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