By agreements, I am talking about things ranging from promises to give him/her the landscape painting to promises for support payments for “all” his/her living expenses.

If you have any pre-attorney agreements with your spouse, check with your attorney in your first meeting. Be clear about the agreements and what you think both you and your spouse said at the time. Be clear about your current intentions.

• How will this be handled in my divorce case?
• I didn’t agree to this, I just kept my mouth shut and now he/she is forcing this on me.
• He/she promised to pay alimony for life. Can I really get that?
• Can he/she really get credit for giving me something now that he/she already gave me as a gift years ago?
• Is this agreement wiped out because we now have attorneys involved?
• Can I make him/her honor this agreement now that we have started the legal part of this divorce?

In collaborative divorce cases there is a method to talk nicely about these expectations. I have been involved in these discussions dozens of times. It is best to get this resolved up front. Don’t hide from these issues. If you want to keep your costs down and get out as quickly as you can, be assertive about clearing the air on these old agreements.

I would like to hear about any broken agreements that you have experienced in divorce.

He and his attorney told Angie and her attorney that the alimony in his offer is non-taxable. Angie would get to keep the entire lump sum and none of it would be taxable. Great. Angie considered the lump sum in relation to her cash needs. Looks good.

But, when the agreement was typed up for signatures, it said that Angie was getting her lump sum alimony money from Herman’s IRA account. Herman was going to transfer that IRA money to Angie. He was not going to withdraw it, pay the income tax due and then hand it to Angie. That meant Angie would have to pay income taxes on her alimony when she withdraws it from the IRA.  When I point this out to her, she and her attorney are no longer happy.

Surprises are not fun in divorce proceedings. Angie and her attorney started packing their stuff, ready to walk out.

I sat down with Herman and his attorney to try to figure out how he could give Angie a lump sum that will not be taxable to her. After all, he had offered that to her.

He didn’t want to part with any of his cash-in-bank. So, we scoured his IRA and discovered that it included a large chunk of post-tax contributions. This meant that Herman could use the post-tax contribution money for the lump sum alimony. Angie would not have to pay income tax on the alimony money she withdraws from the IRA. Angie and her attorney were back to happy.

Income taxes are hidden in all kinds of places. Be careful.

Steve and Marci have two very young boys. In the middle of their collaborative divorce in College Station, Texas, Steve and Marci needed to agree on who would have primary custody if they lived in different locations.

They came into the meeting prepared. They had agreed that Marci had the boys if she lived in Canada or the U. S. If she moves anywhere else, the boys stayed with Steve. With her company folding, Marci had already announced that she would take a job “anywhere in the world”.

Steve is intending to follow Marci and his boys to nearly anywhere in the U.S. or Canada, but not anywhere in the world.

I asked them if they wanted to define the United States. They thought that an odd question. Did they want to stick with the continental U.S. and exclude Hawaii and Alaska? They decided to include Alaska and ditch Hawaii.

Knowing Steve wanted to keep his sons on this continent, I asked him how he felt about Guam. He looked surprised and Marci said, “I could live there!”  Neither of them knew that Guam is a territory of the U. S. But then, they grew up in Eastern Europe where American geography and government were not strong subjects.

They agreed to define the U.S. as the lower 48 states plus Alaska. Had they not tightly defined the U.S., they could have ended up with Marci moving their sons to Guam or another U.S. territory.

I can hear the judge now, “Guam is part of the United States. You should have thought of that before you agreed to this.”

If you are contemplating anything other than a collaborative divorce, you won’t find the answer in that process. In fact, you will have more chance of being one of those four people after your divorce.

In the collaborative divorce process, you get to have a neutral CPA on your team. For less money and more expertise, your neutral CPA will quickly and effectively do the financial work. Attorneys are not quick and effective with numbers. They also don’t give financial advice. One thing your neutral CPA can do for you is analyze your chances of being one of those four Americans.

All my collaborative clients are worried about their financial future. Divorce is scary. Divorce is an unplanned large expense.  Will you be able to retire? Will your children get to go to college? Will you be able to live like you have been?

These are all questions that your neutral collaborative divorce CPA can address.

Don’t be one of the four Americans who are looking at a reduced retirement lifestyle. Get your answers now.

In collaborative divorces in College Station and Houston, we look at post divorce cash needs to help us see options for splitting investments, property, etc. Wives are fine with listing their expenses. They want to show their husbands that their needs are authentic and accurate. These husbands are glad to see that I am going to show their wives – in black and white – that they can’t keep up the spending level.

You guys don’t feel you need to do a budget. You know how much you make. Your personal spending needs are modest. She’s the one who has been spending all the money. She needs the budgeting, not you.

Bingo. There’s the mistake. You need to let her see your living expenses. They may be modest, but they are not as modest as you think. In my experience, people consistently and reliably underestimate their expenses by at least 50%, many times 100%.

I worked with a couple a few years ago. The husband wanted me to work with his wife on her expenses. He told his attorney we didn’t need to look at his expenses. He said he made enough money that he was going to be just fine. He said he had modest expenses. We got well into the collaborative divorce process when he started to put his own numbers on a spreadsheet. He stayed awake that night thinking that he was offering a settlement he couldn’t afford.

The next morning, I showed him that he wasn’t worried enough. He was underestimating his living expenses. The divorce went on pause while I nailed down his true expenses. He backed off his settlement offer. You can imagine how well that went over with his wife and her attorney.  After all, he had been saying for months that his expenses were modest. His mistake and the aftermath of it slowed down that divorce by about three months.

Guys, you need to show your living expenses early in the collaborative divorce process. You need to show, in black and white, that you are not an endlessly deep pocket. Listing accurate living expense is time consuming and boring. If you don’t want to do it yourself, let your financial neutral do it. Be accurate. Be honest. Don’t guess.

Recently, Wall Street Journal Getting Going columnist, Karen Blumenthal, wrote an informative column, How to Wreck Your Credit Score. Karen notes, “The severe consequences underscore that you shouldn’t shrug off even an accidentally missed [mortgage] payment… Being 30 days late on a house payment – even if it is an accident – can knock 100 points off a pristine 780 credit score, moving you from qualifying for the very best interest rates to the edge of subprime territory.”

So, how bad can that be? She explains that if you have a 620 score, you would pay almost 12% on a four-year $25,000 care loan. If you have a 780 score, you would pay 5% on that same loan. The difference is almost $4,000 over the four-year loan. I’m sure you can think of something better to do with $4,000.

Where would you rather spend $4,000?

Yeah, I know…. Duh.  But a recent Wall Street Journal article, Why So Many People Can’t Make Decisions, offers some useful tips to those who are going through a divorce (whether litigation or collaborative law) and those professionals who are assisting them.

Shades of gray people have more trouble in relationships. They can’t seem to make decisions and when they do, they regret them. It’s easy to see that troubled relationships may end in divorce, but the key concept here is the difficulty in making decisions during the divorce negotiations. Having to make decisions on how to divide the family wealth and debt is sure to make anybody stop and think carefully before committing.

Black-and-white thinkers tend to focus on what is important to them. If your spouse is one of these, pay attention to what is important to him or her. Focus on those things to find a way to reach a compromise in your divorce.  Shades-of-gray people are overwhelmed with too many choices. If your spouse is one of these, try to pare down the number of options for dividing property or sharing time with the kids.

You can avoid making the big divorce decisions altogether by choosing the litigation route and tossing the decision to a judge. Or you can maintain control of your divorce by choosing the collaborative law process. In the latter, you get to make quick or slow decisions. You can pare down your choices or expand them. Collaborative law divorce is a process than can be molded to fit black-and-white thinkers and shades-of-gray thinkers, even if they are husband and wife.

This couple is demonstrating unusually mature and intelligent behavior for what the public has learned to expect from entertainment celebrities. This is role model behavior here.

Given the length of their marriage, their separate and combined careers, their separate and community property and their children, this collaborative case must have been complex.  They kept it private while working to a collaborative resolution over a number of months.

For what little there is to read on this divorce, go to http://tiny.cc/zoof0 and http://normatrusch.com/blog/.

Litigated divorces take a lot of time and energy. The divorcing parties have no control over the requirements and time involved. This can drive a person to seek excessive control at work.  That, in turn, can cause coworker anxiety, distraction and wasted time. The experts quoted in this column recommend the reader hunt down the boss, stand in front of the boss’ office door at 7:30 am and meet with the human resources manager and the CEO. This may be effective, but it sure does eat away at constructive work time.

If you are considering a divorce, for the sake of your own job as well as that of your coworkers, learn about collaborative law. It is a divorce method that lets you be in control of the process, the time demands and the pace. For more information, visit the Collaborative Law Institute of Texas website.

There are strong financial reasons to choose the collaborative law process for your divorce. But, when put in perspective, your children are more important than those financial reasons.

I recently came across an Esquire magazine article by Chris Jones entitled The Things That Carried Him. http://www.esquire.com/print-this/things-that-carried-him.This feature story is about thirty-year-old Sergeant Joey Montgomery’s final trip home from Iraq. It is impossible not to be drawn into the journey and not to be touched by the sadness and pride that everyone in his small town felt for this hero.

Somewhere in the middle of the story, Chris Jones describes the recent history of how soldiers’ bodies are now brought home from war. They are treated with deep respect and caring by the men and women who participate in the journey. These men and women never knew these heroes.

Where does this intersect with divorce?

Chris tells one story of a military pilot who “flew a boy to Stockton, California, where the soldier’s parents, divorced, were fighting over the funeral arrangements, and neither showed up”.

I’ve advised on a lot of divorces. In the beginning of both the traditional litigated cases and in the collaborative law cases, the parents are wrapped up in their hurt and anger toward each other. As the cases go on, the litigated divorce parents continue to focus on themselves but the collaborative divorce parents begin to heal and move their attention back to a balanced life that embraces their children. Collaborative couples learn to stop being centered on each other with animosity and start effectively communicating.

This young man from Stockton had parents who never seemed to have looked up from themselves and their animosity towards each other. I guess they never learned to communicate effectively. Perhaps the collaborative law process had not yet arrived in their community. It is there now.

You never know what will happen to your children. If you are looking at a divorce, please choose the collaborative law process so that you won’t remain so self absorbed that you choose to fight with your ex-spouse rather than honor your hero child. Don’t choose to abandon your beloved child’s coffin on the tarmac.