Protecting your finances in a California separation or divorce

One of the most difficult aspects of divorce is the financial aspect.  Suddenly, two households need to be maintained with the same income as what maintained one household before the separation.  In addition, there are court filing fees, attorney fees, expenses for getting a new home and new ‘stuff,’ and many hidden expenses, such as the expense for taking time off work for court hearings, expenses in increased insurance, for example, and the list goes on.

One of the ways to protect yourself is to talk to both an attorney and a financial advisor.  Both should be qualified and be working to help you and not trying to get more money out of you.  If you educate yourself on the legal process and financial planning, you can make better decisions throughout the process. This will help you in the long run.

In addition, make sure you change the beneficiaries on your life insurance, retirements, and other payable-on-death accounts.  Do you really want your ex getting your money? Similarly, update your estate plan to reflect your new circumstances. Note, however, that in California, once the Petition has been filed and served, you may not change your estate plan during the divorce/separation action without permission from your spouse or a court order.

Finally, do an assessment of what you have.  Assemble your life insurance, bank/stock account documents, retirement accounts, debts, etc., and put them all in one place.  Knowing what you have can be the first step in determining where you’re going and how to get there.

Estate planning guide: when, how and why to update your existing plan

One of the most common estate planning questions I get is when and why you would need to update your estate plan. Here are your guidelines:

  1. Has the value of your estate increased substantially since your last update?  Do you have more than $5 million if you’re single, or $10 million if you’re married?  Is this a change from before?  If so, then you may want to consider a review of your estate plan.
  2. Did you complete your powers of attorney before 2003?  In California the forms changed at that time, so now would be a good time to take another look.
  3. Are your beneficiaries on your retirement and life insurance accounts updated?
  4. Does your estate plan reflect your current family and desires for distribution to them?  Or has there been a birth, death, marriage or divorce since your last estate check up?  If so, you may need a review.
  5. Are you protected for a time (the time) when you are unable to think or care for yourself? Do you have your powers of attorney? Long-term care?  Advances in medical care mean we will live longer, but at the same time we will more likely experience a diminishing of capacity before we pass on.  Without these basic planning tools, we leave our family with these burdens.  Are you approaching 50?  If you don’t have long-term care yet, now is the time to get it.  You can’t wait until you need it or you won’t qualify.
  6. Have you chosen a guardian for your minor children?  If you don’t, then your children could become the subject of a custody battle if something happens to you, or they could be place in foster care while the decision is being made.  Don’t take this risk!

If it has been a while since you created your estate plan, or you don’t have one at all, now is the time to put the tools in place to protect your family and your assets.  Schedule a FREE appointment online, or call us at 925.307.6543.

How to save money in California divorce

Divorce can be very expensive.  Not only are you separating households, now working with the same funds but supporting two homes (and two rents/mortgages, two sets of utilities, expenses of duplicate furniture, etc…), but you may be taking time off work for court hearings, spending money on filing fees, and – of course – hiring a lawyer.  And lawyers?  Can be very expensive.

I do what I can to keep the costs down for my divorcing clients, from offering flexible options for payment (no, not monthly payments but I generally try to “break down” the case into more financially-manageable pieces for the client), family law coaching, and divorce mediation, but the cost is not entirely under my control.  What my clients do – or don’t do – essentially drives the path and cost of the divorce.  So, regardless of whether you have an attorney or not, here are some ways to keep the costs of your divorce down:

  1. Manage your emotions.  Divorce is incredibly difficult even in the best of circumstances.  It is likely that you have some strong emotions around it.  But the court and legal process generally will not be concerned about these emotions, and the more  you bring them into your divorce, the more you will likely pay.  Whether it’s spending excessive time with your attorney discussing the emotional issues or pursuing a losing issue because of an emotional attachment, emotions can bankrupt you when they take center stage in your divorce.
  2. Get professional help. As a part of managing your emotions, get the support you need for them by finding qualified mental health professionals to help you through it.  Your lawyer, your family, and your friends will be a great support during this time, but do not mistake any of them as qualified advice helping you through the roller coaster of emotions in divorce.  Find a therapist if you need one.
  3. Get – and get rid of – qualified professional help when appropriate.  Hire professionals who are going to work with you, for you, and who are on the same page as you.  If you feel like your lawyer doesn’t care, or is gouging you, or won’t pay attention to you or return your calls, then get rid of him/her.  Your divorce is yours, and you should have legal counsel that you feel comfortable with, who understands what is important to you, and who is reasonable and professional about fees.  Same with your therapist.
  4. Play fair.  The court and legal process in California has no patience for bids for revenge.  Mud-slinging and nasty declarations for the purpose of hurting the other party can not only rebound and hurt you, but can cost you unbelievable amounts of money.  They also drag on the process, increase the hostility between you and your spouse, and ultimately hurt your children.

Don’t overlook these important estate planning concerns in divorce

When you get a divorce in California (and everywhere else!), there are important estate planning considerations to take into account.  In fact, these are so critical that you could end up leaving your estate to your ex spouse (ouch!), having your ex make important medical decisions for you, or – if you act hastily and without the proper information – you could get into trouble with the court system.

During Divorce:  First, when you file for divorce in California, regardless of whether it’s Alameda County, Contra Costa County, or any other county, once the other party is served, both of you become restrained from doing certain things.  One of these restraining order involves your will or trust, and prohibits you from making any changes to your will or trust once you’ve filed for divorce and served the other party.  One of the others prohibits either of you from changing or cancelling any insurance, such as life, health, auto/property, etc., or changing the beneficiaries on any insurance or other account where a beneficiary is named.  Do not make the mistake of cancelling your ex’s health insurance or changing your will after you have filed for divorce!

You may make these changes with permission from the other party or with a court order, and you may want to seek this.  Particularly if you have separate property, the last thing you want is for your ex to get it all if something happens to you. You may also want to get permission to change the beneficiary of your life insurance into a trust for your children, but you need permission for both of these actions.

One of the changes that you should make as soon as you can, and there is no court prohibition on this, is your powers of attorney.  For both health and finances, you want to make sure you designate someone other than your ex who will make decisions for you and manage your affairs should you become incapacitated.  If you’re lying in a hospital bed unconscious, do you really want your ex deciding whether to get surgery or wait to see if the medication improves your condition?

After Divorce:  Once your divorce is final, you want to make sure you change your will or trust, your powers of attorney (if you’ve not done so already), the beneficiaries on your life insurance, retirement and other accounts, and make sure you have enough life insurance for your children and long-term care insurance to care for yourself as you get older.

Need more help?  Click here for our FREE Divorce e-Course.

Secrets of child and spousal support (alimony) in California divorce

One of the hot button issues in divorce is child and spousal support. It’s a hot button because it involves money, and money is a leading cause of divorce. Many couples are already tense about money, and when you add in the support issue, things can blow up. The problem is one of simple math:

With a married couple, you generally have one household surviving on the income of two parties. You take that household and divide it in two when the couple separates, and you have the same amount of money (not enough) now supporting two households instead of one. Ouch.

Regardless of who moves out and who is the spouse paying for child and/or spousal support, it hurts both parties. The one paying can see in his or her paycheck that the amount being brought home is, in some cases, actually smaller than the amount being paid for support. The one being paid just looks at the money coming in and the bills to be paid, and can’t quite see how to resolve the disparity.

Arguments, often heated ones, ensue. The key is to recognize that not only is this going to happen, but to catch it early and address it. It isn’t going to be easy for either of the spouses, and they had better be prepared. Both spouses, in most cases, are working hard to maintain their lives while they go through the difficult time, and a small amount of understanding goes a long way.

Need more help?  Click here for our FREE Divorce e-Course.

The easiest way to mess up your California divorce: don’t make these mistakes!

Everyone these days is looking for ways to keep costs down, and divorcing couples are no exception.  We see all over the place services offering a divorce for $399, or online ads offering similar low prices for divorces.  These services are generally documents preparers.  Document preparers generally have some experience in filling out the forms necessary for a divorce, but they are not lawyers, do not and have not gone to court, and so they do not know the ramifications for improperly filling out your forms.  They could be depriving you of a benefit that you need, but that you don’t even know about!  Too many times I have had clients come into my office, needing me to clean up a mess a document preparer created, costing them much more money than if they had come to me in the first place.  Use a document preparer at your own risk.  Better yet, don’t use one at all.  Spend a few dollars more at the outset to make sure you get the professional, knowledgeable help you need.

In addition, you must be very careful to complete your forms properly.  In divorce law, there are a great number of forms and disclosures you need to do, such as income, expenses, assets and debts.  You sign these forms under penalty of perjury, so they need to be accurate and complete.  But in addition to these forms, there are other forms that need to be filled out to allow you to let the court and other side know what you want, actually get what you want when it becomes time, have your documents accepted by the court, and have your case completed properly.  While most are straightforward, some have tricky elements that may require a professional to ensure all of your rights are protected.  Do it right the first time to save yourself immense hassle later.

Need more help?  Click here for our FREE Divorce e-Course.

Who needs an estate plan? Top 7 reasons why you need one even if you think you don’t. Part II:

Last time, we talked a little bit about the top reasons why you may need an estate plan, even if you think you don’t.  Here are the last three reasons.

  1. Your children’s guardian.  Have children?  Have you named their guardian?  Is this document posted prominently in your house in case it’s needed?  If you don’t decide on your guardian, the court will.  The court doesn’t know you, your children, your family, or who you think would be most appropriate (or, conversely, who would NOT be appropriate).  You may not have decided on someone, but you’ve probably eliminated some candidates.  When you name no one, no one knows who you have eliminated, as the job is up for grabs to anyone.  Name your preferences or your very last choice could very well raise your children.
  2. Your child’s guardian, part two.  What happens if you’re in an accident and you and your spouse go to the hospital?  Will the police leave your children with the underage babysitter?  No, of course not. If you have not chosen a guardian, and posted that prominently (and told the babysitter), then the police are going to take your children to the police station.  They may very well put your children into foster care while you recover.  While the chance this would happen may be slim, why take the chance?
  3. Other documents necessary.  If you don’t have an estate plan, you’re less likely to have powers of attorney, a living will/advance directive, and other necessary estate planning documents.  These documents generally help you when you become incapacitated and cannot make decisions on your own behalf.  Often a spouse is your first choice, but what happens if your spouse is also incapacitated?  You need to prepare these documents to protect yourself and your wishes from being honored if you can’t speak for yourself.
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