Following the money 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.

Child Support Calculations in California

When I first meet with a family law client, if the individual has children one of the initial questions is invariably what child support will be. To my client’s frustration, I am not able to answer that question because child support is calculated in a complex manner in California. In some states, child support is calculated in a straightforward manner, such s simply taking a percentage of income. In California, this is not the case.

California uses a software program to calculate child support (the California Department of Child Support Services has it here: Child support calculator. The program takes you and your co-parent’s gross income, the percentage time share that you spend with your children, certain deductions (mortgage interest, union dues, mandatory retirement payments, for example), then it calculates your taxes and determines the appropriate ‘guideline’ child support by using a complicated calculation that the California legislature adopted years ago. Once the inputs to the program are determined (or ordered by a judge), the number that the program shows for child support is mandatory for the judge to order unless BOTH parties agree to something different (which happens rarely). Even if both parties agree to a different amount, either party may come back at ANY TIME to modify the support to the guideline level.

In California, then, the critical part of negotiating child support is knowing how the input numbers can be modified or calculated to your advantage. For example, take the time share itself. If you calculate using days versus hours, you could come out with a very different result. Bonus or overtime income is also a tricky issue, as it’s not consistent. You have to be careful that it’s not overlooked in situations where, like in construction, some seasons have little or no overtime (and some have a great deal). If you’re calculating support on the outside of a ‘dry spell’ for overtime, then you could miss the upcoming overtime. If you don’t look back twelve months, similarly, you could in November overlook a substantial holiday bonus coming in December.

Finally, as a family law litigant you have to understand that the smallest change – often unknown until the day of your hearing – can make all the difference in the world for purposes of child support. You can plan and prepare as many printouts of the child support program as you can think of, but if you get to court and the payor has lost his job the day before, that will change the situation dramatically. It is extremely important, therefore, to have a qualified professional helping you to do the calculations so that you can maximize the potential benefit to you.

Kids say the darndest things, even in divorce

During divorce, any and all encouragement is lapped up like water to a divorcee in the desert.  Here are some of those words of wisdom and strength coming from kids.

What did your children say to you to help you through?