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 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.

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.

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.

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.

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.

When looking for a therapist, connection with a therapist is very important. Do not go in for one visit and expect the problem will be solved.  Instead, you should feel a sense of peace in the first meeting. You want to feel a sense of where you are going with this therapist.

Divorces are crazy-making experiences. Dealing with the non-financial issues are as important as the financial issues. It is tough to make the best decisions when you feel despair, sorrow and simply the crazies.

If you want a referral to a Houston or College Station therapist with years of marital and divorce advising experience, send me an email.

I give my clients homework. Get this document, copy these statements and so forth. The most neglected homework assignment is to obtain health insurance quotes. Perhaps it is a scary thing to do. I give them a referral to a great health insurance agent, but still, they procrastinate.

Many can get COBRA through their spouse’s employer. But it is important to check out all your options. COBRA coverage is usually more expensive than health coverage for employees, because the employer typically pays part of the premium for the employees. If you are the divorced spouse who is covered with COBRA, you are going to pay the entire premium without the benefit of an employer subsidy.

As a former spouse, you  can elect to continue the COBRA coverage for as long as 36 months. Check with your spouse’s Human Resources department for the exact length of time. In Texas, your coverage might be only for 18 months. The plan administrator for the health plan has about 14 days to notify the person of their right to get the COBRA coverage. The person needing COBRA coverage must contact the plan administrator within 60 days of the divorce or legal separation.

Most importantly, get your health insurance options straight early in the divorce so you can make an informed decision and negotiate for the premium expenses during the property settlement discussions.

The gotcha here is that you think your wives will not change after you ask for the divorce. She has always let you make the big decisions. She has always looked up to you for your leadership and brains. Now, it feels a bit like a burden to you.

But once she hires me in Houston or College Station, she will begin to wean away from that dependency. You say “Great! I want her to be independent.”  Yes, until she starts questioning your wisdom.

She or her attorney hire me to help her understand the family finances and her settlement options. We figure out her living expenses and those of your children. We are accurate and we have reams of backup to prove it. The trouble is that you listed those expenses at significantly less. That’s because you estimated those expenses while I nail them down tight.

I really do feel for you husbands who are surprised when their soon-to-be-ex wives find their sea legs during divorce. It is a shock to be suddenly questioned after years of respect and trust. You are honest. You are looking after her best interests as you have always done. Why all this grief and mistrust? Because she is finally learning to stand on her own. She is questioning. She is seeking and getting guidance.

Guys, don’t make the mistake of thinking your wives will keep relying on you during the divorce. These wives become independent. And you need to be prepared to deal with it.

1. Find out if COBRA coverage is available under your spouse’s employer.

2. In Texas, there are two kinds of COBRA, federal and state. The former offers 36 months of coverage after divorce while the latter offers 18 months. Find out which one is applicable to your situation.

3. Get a quote on your cost of COBRA coverage from the employer.

4. Seek quotes on individual policies from an independent health insurance advisor. (If you need a referral in Houston, send me an email)

5. Compare the coverage and costs of the COBRA and the individual policies.

6. Be very careful with your timing when changing health insurance coverage from your current coverage to either COBRA or individual policy. Do not have even a day of lapse.

Most people want to put off this project. It seems intimidating. Break it down into these six steps. I cannot emphasize enough how important this issue is for your future financial security.