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.

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.

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So, your spouse has hired a lawyer in your California divorce. What do you do? How to negotiate with OPC (opposing counsel)

One of the most terrifying things you can experience in a divorce is coming into court, expecting the hearing to be between you and your spouse, and finding out that your spouse has hired an attorney.  It can be scary.  Lawyers vary, too, in how they deal with unrepresented litigants.  I am always polite but firm.  I know one attorney who is outright nasty, from calling the other party names to threatening them to yelling at them.  You can’t always expect that an attorney is going to be civil…or even professional, unfortunately.

So, what do you do?  First, if you find yourself in the situation, and you want to or think you can hire an attorney, ask the judge at your hearing to continue (postpone) the hearing so you don’ t have to go forward and get steamrolled by the attorney.  Then get thee some legal advice and/or a lawyer, ASAP!  Generally judges will allow unrepresented parties a break if blindsided by an attorney at a hearing.

Second, if you get an attorney or other help or not, make sure you learn as much as you can about your case and the law.  The more you know, the better decisions you’ll make and quite possibly, the less you’ll pay for your attorney.  Nolo Press has some great books.   Third, remember that the attorney is getting paid to do a job, and is also a person as well as an attorney.  If the attorney is rude or says things you don’t like, it’s not because they have it out for you.  They’re doing their job.  They also may be a fantastic attorney, or they may not be so knowledgeable or experienced.  They may be having a bad day.  They may hate their client.  You just don’t know what’s going on in their head, but if you treat them like you would treat your ex (react emotionally, take offense to everything, or reject everything they say simply because they’re saying it), it’s not going to be productive.

Fourth, remember to keep your eye on the ball (and the bill!).  Don’t spend $1,000 on attorney fees over a $500 stereo.  If the other attorney has a reasonable proposal, don’t refuse to agree to it out of mistrust. I’ve had many clients insist that I draft settlement documents because they didn’t trust the other side.  In certain cases, this is appropriate since the other side might be sneaky. But in many cases, this just isn’t true and by having your own attorney prepare documents, you’re just upping the bill for yourself.

Finally, try to keep it together.  If you tend to be overly emotional, see a therapist.  Lawyers won’t help with this at all.  As soon as you can and as much as you can, try to view the divorce as a business relationship breaking apart.  This is the way the court sees it, so the sooner you get on board, the better.  This may see impossible, but it can and should be done as it will be better for everyone.

Need more help? Schedule an online appointment here or click here for California Divorce Made Easy!

Trusts and debt payment

I am often asked whether creating a living trust will allow the creator to avoid their debts: their mortgage, their credit cards, their other loans and secured debt.  The short answer?  No.

Living trusts are generally created to avoid probate, estate taxes, and allow one generation to pass assets along to the next generation with a minimum of hassle and expense.  Once you pass away, your successor trustee still has to determine what your debts are, pay them from your estate, assess taxes, and then distribute your assets according to your wishes.

What my debt-averse clients may be thinking of is a spendthrift (or asset management) trust, which does in fact protect the assets in the trust from the beneficiary’s creditors.  Spendthrift trusts are used when an individual or couple want to leave money to someone, usually a child, but don’t want to leave a large amount outright, or all at once.  So, for example, the beneficiary gets a certain percentage or amount at regular intervals (or for specific expenses, like education or health or living expenses), but is not entitled to the entirety of the money until a certain time or age.  In this case, should a creditor come after the child and the money in the trust, so long as there are restrictions placed on the disbursements to the child, then the trust money will be protected against the creditor.  This can mean  a great deal when, for example, there are millions in the trust and the beneficiary gets into a serious car accident with large liability.

In general, however, living trusts do not let you get out of paying your debts. The only way to get out of paying your debts is to not leave enough estate to pay them…which I would not recommend to anyone!

When to update your estate plan

I am often asked when an estate plan should be updated, and in fact I have written on it before.  But it is important to revisit from time to time, particularly when there are new estate laws as there are now.  In general terms, an estate plan should be reviewed in two instances:

  1. Each time there has been a birth, death, marriage, divorce, acquisition or disposition of property or a business in the family, and
  2. Every 1-2 years.

By “review” I don’t mean we need to dig up the binder (you do have a binder, right?), and pore over it, page by page.  No.  What I mean is that we need to think about what is in our estate plan.  You should know it in detail because your lawyer explained it so well to you during the process!  So, you want to review who your beneficiaries are, and whether the property distribution you’ve selected still is appropriate.  You want to review who is your successor trustee/executor, as well as who acts as your agent on your powers of attorney.  Have you changed your mind about your advance directive?  These are the questions you should ask yourself, and it really should not take more than 20-30 minutes.  Go through any changes in your family, and see if those changes, or anything else that has happened in the last year or two, make you want to change your estate plan.

In addition, if you have created your estate plan in the last five years, you may want to contact an estate planning attorney now to make sure your estate plan is still the most appropriate for you given the new laws and tax exemption.

In any event, if you have an estate plan that was created before 2008, or powers of attorney created before 2003, you really need to get an update, or at least an opinion on whether an update is necessary.  I don’t know about other estate planning attorneys, but I don’t charge for an estate plan review, even for those estate plans I’ve not created myself.  So what do you have to lose?

Putting your affairs in order: what documents to collect to save your family

Generally, we think of “putting our affairs in order” as something we do after we get the terminal illness diagnosis from the doctor.  There are many reasons not to wait for that time to get your affairs situated, but I’ll leave that for another time.  Today I want to talk about what it actually means to get your affairs in order. First, though, let’s see why it’s important:

Have you ever been the one “in charge” after someone has died?  No?  Imagine this: your nearest and dearest loved one has passed away.  You’ve talked to the hospital and picked a mortuary, so that’s a process that’s been started.  It’s really hard to talk about your loved ones “body” or “remains” while you’re still trying to process the loss in the first few minutes or hours.  But then you feel like you have to DO something, so you head to the house to see if you can find the “important papers.”  Two things can happen at this point:

Scenario one is that you arrive, and already know where the estate plan is, and head right for it.  With it are all of the life insurance policies, retirement and bank accounts, instructions, pre-need funeral planning receipts and contact information, and smaller things like an address book to get in touch with all his/her friends, a locked box (which you have the key) with all of the computer passwords, safe combinations and the like.  There seems to be a lot to do, so you contact the estate planning attorney, who, after asking you a couple questions, says, “there’s nothing to worry about and nothing to do.  Take care of you, your family, and the final arrangements.  Then call me back in a couple weeks if you have questions, but the instructions should all be there…just don’t worry about it now.”  So this is what you do, as you start calling friends and family members and bracing for the days ahead.

Scenario two is that you arrive, and don’t know where anything is.  Does s/he even have life insurance?  Where are the bank accounts?  Was there a will?  Where is it?  You start tearing apart the desk, closets, cupboards,…and find nothing.  Now you’re grieving, in shock, have a million things to do, and now you can’t find anything.  This adds to your stress, so you call in other family members, who are now tearing apart the boxes in the garage.  Everything is chaos, and still no information.  It’s overwhelming to the family.

Which would you prefer your loved ones experience?

The former?  GREAT choice.  Now, here’s what to put in the file:

  1. Your estate plan, with trust and will.
  2. Your powers of attorney.
  3. Your life/long-term care insurance information.
  4. Your retirement information.
  5. Bank account information.
  6. Pre-need funeral planning documents.
  7. Investment account documents.
  8. Deeds of property, such as homes, vehicles and boats.
  9. Health, disability, auto and property insurance documents.
  10. Income source documents (social security, employment, investments, child/spousal support).
  11. Credit card statements and evidence of other debt.
  12. Important papers, such as marriage/birth/death certificates, passports, tax returns, military or genealogical records.
  13. Names/contact information of trusted professionals, such as accountants, lawyers, financial advisors, gardeners, house cleaners or caregivers, home repair professionals (electrician, plumber, roofer, chimney sweep, etc.).

And one final thought: make sure you have at least one trusted friend or family member who knows where it is and what’s in it.

Financial issues in California divorce

Since we’re talking about California divorce this week, I thought I’d add a note on finances, since they seem to be at least one of the top reasons for divorce. Untangling your financial lives can be really tough, even out of court.  Here are some things to consider:

During divorce:

Tax implications – what are the tax implications of your filing status as you go through divorce?  What are the implications of your asset division?

Expert fees – what are your attorney/accountant/child custody evaluator/financial advisor fees going to be?

Support – there are tax implications to paying and receiving child and spousal (or family) support in California. If you just take the highest/lowest amount because funds are tight, you may be in trouble later.

But the divorce process is just the beginning.  You also have to consider the financial aspects of your post-divorce life.  You need to consider these things as soon as possible, and not wait until it’s happened.

Post-Divorce:

Cost of living adjustment – here’s still the same bills, but only one of you is paying them.

Change in auto/home/health insurance costs

Increase in “combined” costs.  Did you share a Netflix account?

Lower savings and discretionary income due to the tightened financial belt.

Loss of assets in the divorce – that retirement home may be gone.

Needing/getting new employment – what do you do if you’ve never worked?

Reduced retirement income or savings – you may have thought you were set for retirement…now what?

The theme for this week seems to be planning.  Planning is you’re thinking of divorce, and planning if you’re in the process of divorce.  Don’t let the process or anything that happens in the process to take you by surprise.  It doesn’t have to if you know what to look for and where to look. Need more help? Click here to make an online appointment.

The divorce process in California

When I first started practicing family/divorce law in California, I wanted someone to walk me through the process, start to finish, so I could understand it as a whole.  What is troublesome, unfortunately, is that all divorces differ in many ways, so looking at the process in general can be tricky.  But let’s try…

In California, the first step in getting a divorce is to file a Petition.  It’s fairly easy, and it doesn’t matter at all which spouse files the Petition (or files first).  There’s no advantage or benefit to filing the Petition over the Response (though there may be some advantages/disadvantages to filing sooner or later, but see an attorney on this…like me!).  To file a Petition in California you have to have lived in California for six months prior to the filing and in the county where you have filed for three months prior to the filing.

Once the Petition is filed (and the UCCJEA if you have children), you may need to file for an immediate court order regarding support, child custody and visitation, property or debt division, or some other urgent manner.  To do this, you file a Request for Order.  For any issues regarding support, you much file an Income and Expense Declaration, showing your – you got it – income and expenses so the court can calculate the appropriate support.

To complete your divorce, not only do you have to agree on child and spousal support, child custody and visitation, asset and debt division and any other issues you may have, but you have to complete your disclosures and obtain a Judgment.  The disclosures are forms: the Income and Expense Declaration and the Schedule of Assets and Debts (which is, you guessed it, your assets and debts), as well as a form showing you delivered these to your soon-t0-be-ex-spouse.  These are required in California, so you must be prepared to share all of your income, expenses, assets and debts with your spouse to get divorce.

You’re now in the home stretch: to obtain a Judgment, once you have everything resolved, you have to file a number of documents with the court.  It can be confusing, and most courts have packets at the clerk’s office to help you complete it.  Of course, a Family Law Coach can always help if you get stuck.  Need more detailed help? Click here to make an online appointment.

How to prepare for divorce

Is there anyone out there anymore who doesn’t know someone who is getting divorced or thinking about it?

The first question on anyone’s mind is what will happen? The most common concerns are about money – rent, bills and health insurance – as well as children. Where will they live? How will we share custody? What are my rights?

Basically, you want to know: what do I need to know NOW so that the process is easier, smoother, and I don’t get in trouble?

Sadly, it can seem nearly impossible to find out this information. If you go to see a lawyer, he or she will spend most of the time trying to convince you to pay out thousands of dollars in a retainer. Trying to find relevant, informative, accurate and current information on the internet is like trying to sort sand on the beach.

So, what can you do? One solution is to consult with an attorney, but say up front that you only want information and do not intend to retain. That can work sometimes, but not all lawyers are equal, and the information you get can be of varied usefulness. You can research on your own – for example, Nolo Press has some GREAT resources. Be sure you stick with state-specific information, however, since state divorce laws vary widely. You can check out my FREE 7-day divorce series on how to save money when getting divorced. Or, you can try family law coaching, which is what I do.

Here are some tips to get you started:

1. Scan or copy your important documents, like tax returns, bank and credit accounts, retirement and 401K statements, mortgage statements, house and car title deeds, etc.
2. Change your powers of attorney before you file. You may also consider severing your joint tenancy.
3. Get all the most sentimental items out of your house, particularly if they are breakable and/or you have a spouse prone to angry outbursts.
4. Courts like to continue the status quo, so if you plan to make a change (go back to school, change your children’s school, start medical treatment, get braces for your children), then start that before you file for divorce.
5. Talk to a lawyer so you know your rights in your specific situation.
6. Consider getting a post office box.
7. Understand what the date of separation means so you don’t hurt yourself by filing too early or too late.
8. Prepare mentally. Deciding on getting the divorce is not the hard part. It’s only the beginning. Consider going to therapy, even if you think you don’t need it. If insurance covers it, it couldn’t hurt.

Your pending California divorce case: What to do with your will

I have been thinking more about my posting about your will, and I felt it needed more to make it complete. Specifically, IF you have a divorce case currently, what can you do NOW to protect yourself and your children? Divorce cases can last for years. Yes, unfortunately this is true, so we have to hope for the best (a speedy and as-painless-as-possible case) and plan for the worst (an endless case). So if you have a case and the ATROs (see last week’s post about what these are) prevent you from changing your will (or estate plan), here are some things you can do.

First, take advantage of the ability to sever joint tenancy (JT). The ATROs allow you to sever joint tenancy with simply NOTICE to the other party. Sever this JT and should something happen to you, you have the ability to give your half of any real property (a house, for example) to someone other than your estranged spouse.

Second, have a conversation. If you have a lawyer, your lawyer might be telling you never to talk to your estranged spouse. I disagree with this family law case philosophy because (as one of our local judges used to say) YOU are in the best position to come to a resolution of your case. If you stop talking to each other, then hostility can grow and you may be likely to fight more. Now, this approach works well for the lawyer, who gets to funnel ALL of your issues at $450 an hour! It’s better on you, your relationship, your pocketbook, and your case if you’re able to talk to each other. Talk about changing your will so each of you can make an estate plan that provides for your own property to go to the individuals you choose instead of each other.

Third, if you can’t have an informal conversation, bring it up in a formal setting. Whether it’s a meeting with your lawyers, a court conference, or if you add it to the issues to be raised at a hearing, make time to discuss these issues so they’re at least out in the open.