Use Mutual Interests to Save Money in Divorce

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Understanding your mutual interests will help you and your spouse to negotiate a satisfactory divorce settlement. Traditional litigation does not foster mutual interests. Collaborative law divorces use mutual interests to get couples to quick, lower cost resolution. Savvy couples seek out the Brazos County collaborative law professionals. The lower cost of collaborative divorces means longer financial security for each spouse.

When couples head into divorce, rarely do they chat about their mutual interests. They usually lawyer-up and entrench in their respective positions. Then the long, slow process begins. Attorneys write letters back and forth. In Brazos County, they use snail mail.  One begins to wonder if the attorneys are purposely dragging these divorces out as long as they can.

I’ve seen hundreds of divorces in Houston, Bryan, College Station and Austin. I have observed that in the litigation divorce style, the couple cannot see that they have mutual interests. In the collaborative law divorces, the couples use their mutual interests to get to a faster, lower cost settlement.

The collaborative divorce couples got themselves into a better process because they knew what to ask each attorney they interviewed. Each spouse asked attorneys whether they are collaboratively trained. Those attorneys who do both litigated and collaborative divorces have a wider range of tools to help their clients.

Collaboratively trained attorneys also understand that when couples work together in the collaborative process to reach a settlement based on their mutual interests, the case goes faster and their clients reach better settlements. All this means lower cost to the couple. That translates to financial security.

If you are concerned about dropping a lot of money on a divorce, work towards a collaborative settlement that is based on mutual interests. For help in effectively defining and achieving your mutual interests or in finding the best collaborative attorneys for you, contact me at stewart@texasdivorcecpa.com.

Get a Jump on Your Divorce

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Looking at a divorce? Get a jump on your case. Save legal fees. Get to settlement sooner. Stop the pain faster.

Make your first step learning about your property settlement options.

Litigation divorce cases in Brazos County move at glacial speed. If you want to end your pain sooner, get a handle on your settlement options before you file and before you seek an attorney. The first thing to do is to meet with a CPA experienced in divorce settlements.

Why shouldn’t you consult with your tax CPA or your investment advisor? Sure, these experts are talented in their own niches. But they don’t have specialized knowledge and experience of working with divorce attorneys through to a wide variety of divorce property settlements. You need a specialist to identify the long-term financial implications from your decisions that will affect your happiness for the long haul. You need a specialist to get you up to speed quickly.

The divorce CPA will walk you through the minefield, showing you where to step and when to jump aside.  He or she will explain the pros and cons of your various settlement options. For example, are you thinking of owning the house together with your ex after the divorce? There are dozens of details that can go wrong. There are income tax implications to avoid or take advantage of. If you don’t address all those issues, they can pop up later to sideline your long-term and short-term financial goals.

How will this save you money?  When you understand your financial options before your attorney does, you are way ahead in the process. You are closer to ending your pain. You will save time and money when you can interview attorneys with the summary and details of your various settlement options in your hand.

When you are ready to look for a divorce attorney in the Brazos County, contact me. I can help you find the divorce attorney who best fits your situation.

How Do I Become Financially Independent?

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You are financially independent when your property generates enough income for you to have leftover money at the end of each month. How long can you keep up your standard of living without earning another paycheck?  Achieving this goal takes determination, stamina and a little bit of luck.

Make it your priority

Just like any goal, if you want to become financial independent, you need to keep this goal top of mind. Look at every financial decision in terms of how it will contribute to your goal. Financial decisions are not just whether to go on vacation. These decisions include whether to buy premium or store brand ice cream.

Take the time to learn all you can about growing your money.  This is not just investing. It includes your college major, your choice of careers and your choice of where to live.

If you are not self-employed, work where your employer will match your retirement contributions. Never turn down free money. Know what it takes to keep your job. If you don’t have a job, look at every possibility to get gainful employment. Mow lawns if you have to. Your luck will turn around if you never give up and you keep focused on your goal.

Marry the right person. I am not talking about marrying a rich person. I am talking about marrying someone who will give you the kind of support that helps you attain your financial goals. An unhappy marriage drains you both emotionally and financially.

Cut costs everywhere

Along with making it your priority, constantly look for ways to spend less. Can you get along without a car? Can you car pool? Can you live in less expensive housing? Can you take your lunch to work? Can you consistently choose the cheapest item on the menu?  You need to do these things if you intend to achieve the goal of financial independence.

Save and do not touch that savings

Put 20% of your income into savings. This is the part you do not touch. You will additionally need an emergency fund for things like illness, car repairs and appliance repairs. Be very serious about never ever touching this savings. While you are building up your savings, everything you can about how to invest and how to keep your taxes down to a minimum. Then, when you have reached a point where you have enough to take advantage of investment opportunities, you will be ready to invest and grow your money so that it generates enough income that you will have extra money leftover at the end of each month.

 

Be Brief: Reduce Divorce Costs

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Whether in Houston or College Station, clients everywhere want to keep their divorce costs down. I encourage my clients to spend wisely but not too generously on their divorce. I want them to have a divorce that sticks but also have money left over to fund their own retirement. There are some easy ways to keep your costs down. All you have to do is keep your focus.

Focus on what you want to accomplish every time you contact your lawyer. Attorneys charge for their time. That includes time to read and reply to emails. Include only the essential information in your emails. I recommend that you ask no more than two questions in an email. Isolate each question with some white space around it. Consider numbering them: “Question 1 …. Question 2.” Make it easy for your attorney to see your questions because that will make it easier and faster to answer them. This saves you money.

Do not vent or ramble. This is true in emails, phone calls and face-to-face meetings. Of course you are in emotional turmoil, but your attorney is not your therapist. So focus on business. Save your emotional outbursts for your sympathetic friends or your therapist’s couch.

For phone calls and meetings, have a list of your questions with the most important questions at the top. If your meeting or call ends before you get through all your questions, at least you will have addressed the most important ones.

If you are looking for a divorce attorney in the Brazos Valley, contact me. I can help you find the divorce attorney that best fits your situation.

Don’t be Fooled by Your Spouse’s TRS Statement!

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Texas TRS pensions are commonly seen in Brazos County divorces. If your spouse has a TRS pension and you are in a divorce, don’t be tricked into thinking the account balance on the annual statement is the value of that pension benefit.

The account balance on the front of the TRS Annual Statement of Your Member Account is merely the amount your spouse has contributed to the account plus the amount the state of Texas has contributed to the account plus the interest earned on the account. In contrast, the value of the account (known as the present value) is the amount of money that would need to be invested today so as to have enough to fund the retirement pension payments starting on the retirement date and going through the estimated lifetime of the retired employee.

Calculating that value involves complex mathematics. I will spare you those details. But it is good to know that pension values are calculated using standards from the Actuarial Standards Board, specifically Actuarial Standard of Practice Number 34.

The amount of money it will take to pay out that pension is significantly greater than the account balance shown on the annual statement. The longer the employee has been contributing into the TRS pension plan, the bigger the pension benefit present value will be.

Why should you care? Because the bigger your spouse’s pension value, the more there is to share in the divorce property settlement. This is true for any pension, not just a TRS pension.

If your family property includes a pension, feel free to contact me with your questions. I can also refer you to the best local Brazos County attorney to meet your individual divorce needs.

The Secret of Finding the Best Divorce Attorney in Brazos County

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The best divorce attorney is the one who best fits you and your divorce issues. Don’t think this would be your friend’s divorce attorney. Nor the attorney with the biggest caseload. Nor the biggest law firm.  The optimal attorney for you will be the one who has experience with your issues, communicates well and shares your priorities.

No one has exactly your divorce. It only takes one small condition to make your situation significantly different that of someone else’s divorce. You need to find the attorney with experience in your particular issues. If you own rental real estate, you need an attorney with experience in negotiating effective settlements involving rental units. If you are not sure how to proceed with your case, you need an attorney who can offer you choices – one who is great in the courtroom, an effective negotiator and is trained in collaborative law.

Communicating well means communicating easily with you. Are you comfortable with emails? Would you like an attorney who prefers phone calls? What are your needs for speedy replies from your attorney? I had a client who resorted to sending her local attorney a certified letter just to get his attention.

Know what is important to you. Do you want to save money? Then I recommend you seek an attorney whose style includes welcoming your do-it-yourself assistance. Do you want to have a cordial co-parenting relationship with your ex? Then I recommend you seek an attorney with collaborative law training. What are your priorities?

If you are looking for the right divorce attorney in Brazos County, send me an email to stewart@TexasDivorceCPA.com. Let’s take a few minutes to talk about your situation, needs and priorities. I can refer you to the local divorce attorney with the best fit for you.

Divorce Mediation: Learn from the Boy Scouts

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To increase your odds of getting what you want in mediation, take a tip from the Boys Scouts: Be Prepared. Most of my Brazos County divorces include mediation. When you are prepared, you have a better chance of a successful outcome.

Develop a realistic settlement range. At the low end, know what your worst-case settlement looks like. At the high end, what is your dream settlement? Calculate your break-even point. These steps will prepare you to respond to various proposals that will come from your spouse during the mediation.

Identify what is essential to discuss at mediation. Make a list. Review it with your lawyer a few weeks before the mediation. The issues don’t have to be financial. One of my clients had a strong emotional issue regarding the old videotapes of her daughter’s early childhood. The mediation did not end until she and her husband resolved the issues surrounding those tapes.

Bring your starting offer. If you initiated the divorce, come to mediation with a written offer. Get the settlement discussions started right away. Your starting offer should not be your bottom line settlement scenario. Consult with your lawyer to pull this initial offer from somewhere within your realistic settlement range.

If you are getting a divorce in Brazos County or nearby counties, I can refer you to excellent divorce lawyers and mediators.

Separating from your Spouse… and your CPA?

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In the divorce process, it is likely that you will face unintended tax consequences in your settlement options. Brazos County divorce attorneys are not always aware of many of these tax issues. A CPA can identify these divorce tax traps that can pop up after your divorce.

When your tax CPA has represented both you and your spouse in the past (such as preparing a joint tax return or giving estate planning advice) but now provides divorce advice to only one of you, one kind of conflict of interest arises. A second kind of conflict arises when your CPA has attempted to give you both generic marital property advice early in your divorce. For example, while attempting to help you both in the divorce, your CPA recommends a basic division of property. Your CPA has used preliminary values for your property. Later, it turns out that the values used to calculate the final division are substantially different. This can result in very different property split and it appears that your CPA has acted in the interests of one of you over the other. Conflicts bring liability risks for CPAs.

Your risk is that your CPA doesn’t think about the liability risk and kindly starts giving financial advice that turns out to favor your spouse. Whether the advice is for both of you or just one of you, the result could unintentionally cause lopsided financial effects for you.

Many times, CPAs would rather not get involved in divorce issues. Those CPAs prefer to avoid giving financial advice until after the divorce is final. Fortunately for these clients, there are CPAs out there who are willing to guide clients through the financial maze of divorce.

Brazos County divorce lawyer, Randy Michel, explains that a judge may consider the income tax implications in considering what a “just and right” property division would be. However, that does not mean the judge will ask questions on his/her own or drill down deeply unless your attorney can and will educate the judge as to the applicable tax implications.

If your divorce lawyer is not also a CPA, educating the judge could be a challenge. A CPA with experience in divorce cases can identify those unforeseen financial and tax issues and educate your attorney and your judge.

If you think you could benefit from this kind of advice, let me know. I can also refer you to a Brazos County divorce lawyer.

The Number: How Much Spousal Support to Seek?

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After a long marriage, women facing divorce struggle with knowing how much spousal support to seek. You can help yourself by understanding your future cash flow situation.

Make a detailed list of the living expenses you will have after your divorce. Identify your expenses. Create a separate list of expenses you wish to cover for your children. Look over your bank statements and credit card statements for the past year. Identify those expenses that will not change after your divorce. Then make a list of spending amounts that will change after your divorce. Will you have a new cell phone contract? How about your vehicle insurance premiums? Are you expecting to have a different home?

Estimate how much of your living expenses can be covered by non-wage income. If you have investments, the income on those may change after you start making investment decisions on your own or are working with an investment advisor. Consider whether you might have Social Security income or pension income. Estimate how much child support you think you will receive.

Will you have income from a job? How much you can earn in a career?  If you already have a career, this step is relatively easy. If you are just now entering or re-entering the workforce, this step is more challenging. Consider seeking advice about your employment possibilities from a career advisor.

To find out how much spousal support you might want to ask for, add your estimated sources of income together and subtract your anticipated expenses. If the result is a negative number, that is your starting number for how much spousal support to seek. Weigh this against the Texas spousal support guidelines and the amount your soon-to-be-ex husband can manage. Work with your divorce attorney to fine-tune your approach.

I can refer you to Brazos County divorce attorneys as well as career advisors and investment advisors.

Are you worried about IRS problems haunting you after your divorce?

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Texas spouses whose divorcing husbands or wives have controlled the income tax returns during the marriage often worry about having the IRS come after them for back taxes and penalties years after the divorce. If this sounds like you, you can benefit from knowing about innocent spouse relief and an indemnification clause to protect yourself.

When you file a joint return, each of you and your spouse are liable for all of the taxes, penalties and interest owed on the return. After your divorce, you will still be on the hook for the unpaid taxes that apply to your joint tax returns from the years you were married. That is, unless you can qualify for innocent spouse relief.

Early in your divorce, talk with your attorney about getting an indemnification clause in your divorce settlement. In Texas, this would be included in your divorce decree, agreement incident to divorce or a mediated settlement agreement.  It would say that your ex-husband or ex-wife is required to reimburse you for future tax liabilities related to prior tax returns.

By the way, the IRS does not care about this indemnification clause. They can still go after you for any taxes, penalties and interest owed from either you or your ex.