Financial Issues

The Economic Impact of Divorce – The Financial Storm

April 20, 2023 By Laurie Schmitt

The cost of food has risen. The housing market remains unpredictable- values soaring and values crashing. The cost of gas has gone sky high, with no end in sight. Consumers have experienced a significant drop in purchasing power. So, how can a weak economy impact your divorce?

It can be an added stressor if you’re not financially prepared for your new economic reality: a single income. And you need to quickly assess how far your income will go in today’s economic climate. You need to be prepared to weather the storm. If you’re going through a divorce, the following are a few tips on how to get through the financial storm:

INVESTMENT ACCOUNTS: Many people have watched their retirement/investment accounts drop in value. What does this mean to you? This could delay your retirement plans. Work with your financial advisor to see what you can do to reduce your loss and stay on track with your retirement plans.

EMPLOYMENT: Employment security can be in question. You think you have job security. But that may be further from the truth than you think. Businesses are laying off staff and closing their doors in record numbers. When you’re at work, keep your divorce conversation low key. You don’t want management to think you’re unable to perform effectively because of divorce drama.

SUPPLEMENTING YOUR INCOME: Prepare a realistic budget for your new single income status. Perhaps you may need to consider seeking a part time job to supplement your first income. Leave enough room in your new budget for unexpected expenses.

WATCH YOUR SPENDING: Don’t make unnecessary major purchases. Be mindful about how you’re spending your money. After the divorce you may need transportation. But it doesn’t mean you need a new car. And of course, you need a place to live after the divorce. But it doesn’t mean you need to put yourself in a position of being rent or mortgage poor.

MANAGE YOUR COSTS: Review your cell service plan, cable service, subscriptions, memberships, club memberships, gym memberships, and other monthly spending. Ask yourself if these are necessary expenses, or just extra spending you can live without.

DOWNSIZING: If you had “toys” such as boats, motorcycles, campers, and snowmobiles during your marriage, you need to carefully contemplate your ability to afford them after your divorce. Not only do they cost money to purchase, but they cost money to maintain and use them. It may no longer be reasonable for you in your new single status to keep recreational vehicles that you and your spouse purchased while married.

LEARN TO COOK: Dining out can be considered a luxury. And even if you say I only go out for fast food, frequent trips to fast food restaurants can add up to thousands of dollars a year.

COFFEE: Learn to make your own coffee! Spending $5 cup for a cup of coffee five times a week equals $1200 a year. What else could you do with an additional $1200 a year?

TAX CONSEQUENCES: You need to review your tax withholding and estimate tax payments for any necessary adjustments which may need to be made to reflect your new single status. Contact your accountant or talk to your human resources department to make sure you are paying taxes at your new single status.

PROVIDING SOLUTIONS FOR FAMILIES. GRAND RAPIDS COLLABORATIVE DIVORCE ATTORNEY SERVING KENT, OTTAWA, AND ALLEGAN COUNTY.

At Schmitt Law, PLLC, we understand that filing for divorce can be an emotional and confusing experience. And we understand the negative impact a divorce can have on financial security. That’s why we are committed to providing personalized service to each client we represent, and will be with you through this difficult journey. At Schmitt Law, PLLC we encourage clients to take a more collaborative approach to divorce that promotes positive communication and cooperation. Through mediation or the collaborative divorce process, Laurie guides her clients through amicable divorce settlements so they can move forward with their life. To discuss your circumstances and legal options, contact Schmitt Law, PLLC at (616) 608-4634 to schedule a consultation. Or contact us online to arrange a consultation.

What Is The Role of The Financial Neutral In a Collaborative Divorce?

February 6, 2023 By Laurie Schmitt

In a collaborative divorce, the financial neutral obtains and complies financial information about the family’s current and anticipated financial circumstances. They then share this information with the collaborative team (attorneys and parties). Their financial analysis ensures both spouses have access to financial information and understanding about the marital estate. With the aid of a financial neutral, the parties can transition into two households with a full understanding of what it will require to establish and maintain their individual households.

WHO DOES THE FINANCIAL NEUTRAL WORK FOR?

The financial neutral works for both parties, helping them to reach an equitable and balanced financial settlement. Unlike a “traditional” litigated divorce, a financial neutral is an important member of the collaborative team, generating financial options for both parties, without dictating a specific outcome.

HOW CAN A FINANCIAL NEUTRAL ASSIST COUPLES IN A COLLABORATIVE DIVORCE?

The financial neutral can provide assistance to the divorcing couple in a number of ways including:

Financial Neutral in Collaborative Divorce

Real Estate: A financial neutral can assist parties in determining values of real estate such as vacation homes, rental property, commercial property, and other real estate investments.

Retirement Plans: A financial neutral can assist parties in determining what retirement accounts the parties have such as pensions, 401K’s, and all other retirement accounts, and provide the parties with information regarding division of each plan.

Businesses: A financial neutral can gather information related to business ownership (cash flow, assets, liabilities) so that they can provide a complete analysis of the parties’ financial position.

Tax Advice: A financial neutral is qualified to provide tax advice related to division of assets,

Spousal Support/child support: A financial neutral can assist parties in understanding how spousal support and child support is determined and what financial resources will be considered for the purposes of spousal support and child support.

Budgets: A financial neutral can assist the parties in setting short-term and long-term budgets (through the pendency of the divorce process as well as after the divorce). This assistance is beneficial to parties so that they may determine their individual post-divorce budgets. With this knowledge, parties are able to make necessary financial decisions regarding their individual households such as rental verses home purchase, lease verses car purchase, health insurance costs, and other related financial issues.

Financial decisions: The financial neutral can discuss options with the parties so that there is a clear understanding of the implications of the parties’ financial decisions and how it will impact each party post-divorce.

WHY DOES THE COLLABORATIVE DIVORCE PROCESS DEPEND ON THE FINANCIAL NEUTRAL?

In a collaborative team setting, each professional does what they do best. Attorneys are trained in the law, and financial neutrals are trained in finance. Therefore, is makes sense to have a financial neutral involved to assist the team with financial decisions. A financial neutral can provide expert financial advice and assistance when most attorneys simply are not qualified to do so.

In summary, divorcing parties must be fully informed of their financial situation prior to the conclusion of their divorce. A financial neutral can evaluate and provide options for the divorcing couple and discuss the challenges they may face after one household becomes two. They encourage divorcing couples to look at their long-term goals and what is in the best interest of the family (not just the greater good of one party). As the name states, they are neutrals.

A GENTLER DIVORCE. GRAND RAPIDS COLLABORATIVE DIVORCE ATTORNEY SERVING KENT, OTTAWA, AND ALLEGAN COUNTY.

Divorce is a painful and emotionally stressful time for everyone. That’s why more couples are turning to the collaborative divorce process. A highly trained team of professionals work together with you to develop a fair, open and child centered resolution. If you want to avoid going to court, reach your own agreement, and promote positive co-parenting post-divorce, the collaborative divorce process may be an alternative for you.

Laurie K. Schmitt, founder of Schmitt Law, PLLC, is an Attorney, Mediator, and Collaborative Divorce lawyer. When possible, she guides her clients through amicable divorce settlements so they can move forward with their life. Contact Laurie online or by calling (616) 608-4634 to schedule a consultation to discuss the collaborative divorce process and how it can benefit you.

How to Navigate the Financial Issues During the First Days of Your Divorce

October 6, 2022 By Laurie Schmitt

You’ve decided to file for a divorce. What financial issues should you be most concerned with during the first few days of your divorce process? Before you file, strategically lay out a plan with your attorney as to how you will handle the finances, and protect the assets of the marriage.

The following are financial issues that should be addressed before (or closely after) you have filed for your divorce.

DO NOT ADD TO YOUR DEBT: Make sure you and your spouse do not acquire new marital debt. It’s hard enough to address division of debt in a divorce, without new debt being created. You certainly do not want more debt to be acquired during the divorce, unless both you and your spouse agree that new debt is necessary.

PRESERVE YOUR CREDIT: Make sure all marital debt is being paid, and being paid on time. Come to a written agreement with your spouse as to how the marital debt will be paid. If you are unable to come to a written agreement, then seek a court order to establish how the marital debt will be paid. It is imperative that this written agreement or court order is signed at the onset of the divorce to ensure on-time payments of the marital debt. You do not need to destroy your credit during the divorce process with failure to pay or late payments.

PROTECT YOUR ASSETS: Even if you and your spouse are getting along, it’s best to enter into a stipulated mutual restraining order to protect your assets and liabilities. If you are unable to agree, your attorney should obtain a mutual restraining order when your divorce case is filed. A mutual restraining order provides protection to both parties by prohibiting parties from disposing or hiding the parties’ assets. By having the court sign a mutual restraining order, it alleviates the concerns that either party may do so legally. A mutual restraining order will protect anything you require it to protect, and can be drafted to meet the specific needs of the parties.

KEEP FINANCES STATUS QUO: The goal is to keep your finances status quo until a temporary or permanent written agreement can be reached. Parties should enter into a temporary order on how the finances will be handled (what bills will be paid, when will they be paid, and who will pay them) until a final agreement can be reached in the divorce case.

GRAND RAPIDS COLLABORATIVE DIVORCE ATTORNEY SERVING KENT, OTTAWA, AND ALLEGAN COUNTY.

If you filed for divorce, or are considering filing in the near future, contact the Michigan family law attorney at Schmitt Law, PLLC. We have extensive experience handling all types of Michigan divorce cases and the related issues that frequently come up in the divorce process, including spousal support, child custody, and child support. We provide custom-tailored legal advice and solutions for clients. To learn more about how we can help you through the divorce process, contact Schmitt Law, PLLC today by completing our online contact form, or calling us at (616) 608-4634 to schedule a consultation.

Hidden Assets In A Divorce

September 8, 2022 By Laurie Schmitt

Before you settle, obtain knowledge about your marital assets!

It’s not uncommon for spouses to lack all of the financial information in a marriage. But, it’s critical that, through the divorce process, you obtain all of the financial information such as bank accounts, retirement accounts, pensions, stocks, and business information in order to negotiate the terms of your divorce effectively and fairly. Diverse and high value assets can make this process complicated, and some spouses may try and take advantage of that by hiding some of their assets or the value of those assets.

IS IT LEGAL TO HIDE ASSETS IN A MICHIGAN DIVORCE?

Hiding assets in a Michigan divorce is illegal, and can result in an inequitable division of property. Why, because each party has a right to have marital assets divided equitably in the divorce action. And how can a judge divide the marital assets equitably if one spouse has more financial resources than is legally disclosed to the court? To ensure equity and fairness in the divorce process, both parties are legally obligated to disclose all marital assets to the other party in the discovery process and to the court.

WHAT HAPPENS IF I HIDE ASSETS IN MY MICHIGAN DIVORCE CASE?

If you attempt to defraud the court, the court will not take lightly that you attempted to hide assets during your divorce, and you can be found in contempt of court. Depending on the severity of the deception, you may face criminal charges. Alternatively, the family court judge may award your spouse a higher percentage of the marital assets, to include awarding your spouse the entirety of the hidden assets.

WHAT IF I DO NOT KNOW WHAT OUR MARITAL ASSETS ARE?

If you have not been active with your marital finances, or suspect your spouse has assets/accounts you may not know about, it is important that they be discovered. You and your spouse will be required to complete a Financial Affidavit disclosing necessary financial information. After the Financial Affidavits have been exchanged, your attorney can determine what other financial information they require, and request the necessary financial information from your spouse or their attorney.

HOW CAN I PROTECT MYSELF?

With specific language properly placed in your Judgment of Divorce, you can protect yourself. The language states that if your spouse fails to disclose assets during the divorce, these hidden assets discovered post-divorce will awarded to you. And, you should include language in your Judgment of Divorce that if you are required post-divorce to go before the court on a hidden asset issue, the offending party will be responsible for your attorney’s fees and court costs.

CONTACT AN EXPERIENCED GRAND RAPIDS COLLABORATIVE DIVORCE ATTORNEY SERVING KENT, OTTAWA, AND ALLEGAN COUNTY.

Divorce can be emotional and messy, and it’s natural for anyone going through a divorce to want to protect their financial interests. Maintaining an objective view of the situation can be difficult when you are struggling with complex emotional issues and personal tensions in your divorce. As an experienced Michigan divorce lawyer, Schmitt Law, PLLC can help you maintain control over your property in divorce, and provide detailed guidance and support throughout every step of the process. The right attorney can increase the likelihood of you securing a favorable outcome to property division in your divorce.

Laurie Schmitt of Schmitt Law, PLLC has years of experience representing clients in a wide range of difficult divorce cases. We understand the financial concerns our clients often have regarding their property ownership rights and the doubts they often experience when it comes to property division in divorce. If you are seeking a divorce, contact us today to schedule a consultation. Contact Schmitt Law, PLLC online or by calling (616) 608-4634 for a consultation today.

How Does Debt Work In a Divorce?

June 20, 2022 By Laurie Schmitt

WHAT IS MARITAL DEBT?

Marital debt is defined as any debt incurred during the marriage (before the date of separation). If you are still living together, then we look at the filing date of the divorce. As a general rule, both spouses will be responsible for one half of the debt incurred during the marriage, no matter who spent the money, and no matter how the money was spent.

HOW DO WE DIVIDE DEBT?

Now that you and your spouse have agreed to seek a divorce, it is imperative that each of you understand what debt you have accumulated, and how it will be divided.

It makes sense that you and your spouse talk about your debt and make decisions on who will retain what debts. You should discuss if and how you will refinance any debt that the other spouse is legally responsible for. And, you should agree to close joint credit cards and lines of credit now, agreeing that no further joint debt will be incurred. Inevitably you will need to stop using joint credit cards, and incurring joint debt. So, the sooner you divide your finances, the better.

WHAT HAPPENS IF WE ARE UNABLE TO COME TO AN AGREEMENT?

If your spouse refuses to work with you to develop a post-divorce financial plan, then your next step is to know what debt you have. If you have little or no information about your debt, you will need to educate yourself on the financial aspects of your marriage.

First, order your credit reports. This will show you what debt you have under your name. It may not be all inclusive of the marital debt. But it is a start in getting the full picture of your debt. Second, write down all of the debts you know. Write down the names of creditors, current balances, account numbers, and note who is legally responsible for each debt. This will assist your attorney and the court in understanding what debt you have, and what the balances were at the time of separation or time of filing the divorce.

In the event that you and your spouse cannot come to an agreement privately, or through mediation, the judge will be the decider of the division of debt.

WHO WILL BE RESPONSIBLE FOR THE DEBT AFTER THE DIVORCE?

Assuming all of your debt is marital, it will be divided equally between you and your spouse.

PROTECT YOURSELF!

Cancel all joint credit cards now! You may bear the responsibility of these debts after your divorce. By cancelling joint credit cards, you are protecting yourself from future responsibility of new debt.

DISCLAIMER

The determination of what may be marital debt in any specific divorce case, and how it will be divided can be complex. This blog discusses only the basic premise that the debt you and your spouse have is marital and will be divided equally. However, laws surrounding divorce and division of debt can be complex.

GRAND RAPIDS COLLABORATIVE DIVORCE ATTORNEY SERVING KENT, OTTAWA, AND ALLEGAN COUNTY.

Divorce can be emotional and messy, and it’s natural for anyone going through a divorce to want to protect their financial interests. Maintaining an objective view of the situation can be difficult when you are struggling with complex emotional issues and personal tensions in your divorce. As an experienced Michigan divorce lawyer, Schmitt Law, PLLC can help you maintain control over your property in divorce, and against taking on responsibility of debt that may not be marital. We will provide detailed guidance and support throughout every step of the process. The right attorney can increase the likelihood of you securing a favorable outcome to property and debt division in your divorce.

How Cooperation Can Help Resolve Financial Issues

May 18, 2022 By Laurie Schmitt

Filing for divorce is the easy part. Untangling the financial mess and reaching a final agreement on the financial aspects can be the difficult part. In Michigan, financial issues must be resolved before the divorce can be finalized. How do we get started?

KNOW YOUR FACTS

Before getting started, you will need to know how much you owe and to whom. Make a list of your creditors, with the respective balances. And, it’s wise for each party to request a copy of their credit report so that no debt is missed during the discussion of debt division.

Once you know who you owe and how much you owe, talk to each other to discuss how you will continue paying these debts during the pendency of the divorce. And also agree that no further unnecessary debt will be incurred while the divorce is pending.

HOW ARE WE GOING TO UNTANGLE OUR FINANCES?

If you and your spouse have savings, or will have equity from the sale of your marital home, consider using these assets to pay off or pay down your marital debt. This is the easiest way for both parties – you leave the marriage with the least amount of debt possible and each of you can start fresh.

The parties can also agree that one person will take more of the marital debt in exchange for:

Receiving more assets.
Paying less in spousal support.
If one person is retaining the marital home, paying less to the other party for their share of the equity in the marital home.

HOW CAN WE RESOLVE FINANCIAL ISSUES WITHOUT LITIGATION?

The parties can come to an agreement regarding their debt and assets, or the judge can be the final decider. Most parties want to maintain control of the outcome, as well as avoid costly and time-consuming litigation. So, how can we resolve financial issues without litigation?

MEDIATION

A neutral, third-party, trained family mediator can assist couples in creating their own agreement regarding debt and assets. Mediators remain neutral, and do not make decisions for the parties. They assist the parties in getting to a mutually agreeable resolution. Once the parties have come to an agreement, the mediator will draft a mediation agreement. The terms of that agreement are binding in court.

COLLABORATIVE PROCESS

In the collaborative divorce process, the parties resolve their issues in a respectful manner, using a team approach. The team assists the parties in crafting solutions in the best interest of each party, without involving the judge to make their final decisions. In the collaborative divorce process, the parties, their respective attorneys and a coach meet in a group setting. An agenda is set for each meeting, to assist the team to stay on track. These meetings are designed to encourage the sharing of ideas and settlement options. The goal is to reach an agreement on the financial aspects and obtain a binding written agreement.

To conclude, even tough it may be difficult to work with each other amidst the divorce, understand that you share a common goal. That goal is to leave the marriage with the least amount of debt owed as possible. With this is mind, it may be easier to remain cooperative and make smart financial decisions for the benefit of your post-divorce life.

EXPERIENCED DIVORCE ATTORNEY

At Schmitt Law, PLLC, we are here for you each step of the way in your divorce. From planning your first steps, to approaching your separation, to helping you understand your rights, to signing the final documents. We can help you navigate the separation and divorce process. To get started today, book a consultation online or by calling Schmitt Law, PLLC at (616) 608-4634. Whenever you are ready, we are here for you.

Financial Recovery After A Divorce – How Do I Start Over Again?

May 13, 2022 By Laurie Schmitt

After a long-term marriage, many people find themselves in the midst of a divorce. Their immediate concern is how will this divorce impact them financially — how will they financially start over again. Perhaps they are wondering how they will support themselves post-divorce, or how they will recoup their losses after the division of retirement accounts and other assets.

Clients come into the initial interview completely overwhelmed and expect to find all of the answers. When working with clients who are dissolving a long-term marriage, it is important to take it one step at a time, and work together to resolve their concerns.

Clients who have been in a long-term marriage may not have been the major breadwinner, or may have never worked, and now have a limited earning ability. Many times, there is one spouse who is predominant in handling the finances, leaving the other spouse “in the dark”.

In these cases, we must carefully review the assets of the parties. The first step is to put together a list of the assets, and their respective values. If a client is unaware of the assets, or their respective values, we can work together to obtain the missing information so that we have a snapshot of the assets and their respective values.

It is important in a long-term marriage to determine if spousal support is appropriate, and to calculate what the amount and duration may be. A review of retirement accounts and/or pensions must be made. Parties often overlook the smaller assets such as equity in vehicles, boats, campers, snowmobiles, and other recreational vehicles, as well as valuing any silver, gold, and other coin or stamp collections.

It is also suggested that parties counsel with an expert such as a financial advisor or accountant who can determine their financial objectives, earnings, and expenditures and help them to design an appropriate financial plan post-divorce.

After review of the assets, debts, and potential spousal support award, clients can better understand what their potential financial outcome will be post-divorce, allowing them to make decisions moving forward.

CONTACT AN EXPERIENCED DIVORCE ATTORNEY IN GRAND RAPIDS, MI

What Is a Domestic Relations Verified Financial Information Form In a Divorce?

April 1, 2022 By Laurie Schmitt

In the State of Michigan, after you have filed a complaint for divorce, both parties are required to exchange financial affidavits (known formally as the “Domestic Relations Verified Financial Information Form”). The Domestic Relations Verified Financial Information Form must be exchanged within 28 days after the date of service of Defendant’s initial responsive pleadings to the complaint for divorce.

What Information Is Required To Be Disclosed In The Domestic Relations Verified Financial Information Form?

The Domestic Relations Verified Financial Information Form requires you to disclose the following information:

Personal Information: Must provide name, address, phone number, date of birth, social security number, and driver’s license number.
Employment Information: Must provide employer’s name, address, gross income, and hourly rate of pay. If self-employed, they must list all draws made during the last 12 months.
Employment Benefits: Must provide health, vision, dental, life, and retirement benefits, car allowance, expense reimbursement, and any other benefits received by the employer.
Other Income: Must provide income from all other sources such as commissions, bonuses, profit sharing, interest, dividends, annuities, pensions, trust funds, IRA’s, worker’s compensation, social security benefits, VA benefits, disability insurance, GI benefits, rental income, and spousal support.
Real Property: Must provide address, date of purchase, estimated value, SEV, balance of mortgage, monthly payment, name of lender, and information on any equity loan.
Financial Accounts: Must provide type of account, account number, name of institution, name on account, current balance, and balance 90 days before current balance. This information must be provided for each account.
Pension: Must provide all defined benefit plans to include company or employer name, lump sum value, estimated monthly payment, and earliest date eligible to receive pension.
Life Insurance: Must provide insurance company name, policy number, policy owner, beneficiary, account of death benefit, premium amount, cash surrender value, and if employer provided.
Motorized Vehicles: Must provide year, make, model, title holder, lender, estivated value, and amount owed.
Personal Property: Must provide description of property, estimated value, and date purchased or acquired.
Debts: This includes credit cards, personal loans, student financial aid loans, other unsecured loans. Must provide type of debt, name of lender, account number, name on account, and balance owed.
Court Ordered Financial Obligations: This includes child support, spousal support, garnishments, civil judgments, court-ordered fines, fees, and restitution.

What Does “Verified” Mean?

As the title notes, the Domestic Relations Verified Financial Information Form is “verified”, meaning you must sign the form in front of a notary declaring the statements are true. Therefore, it is imperative that the person completing the Domestic Relations Verified Financial Information Form be truthful in their statements, as the statements made can be used against them in any court proceeding.

Going through the Court to solve your divorce.

If you’re going through a divorce and want to understand your options, Schmitt Law, PLLC is standing by to assist. To schedule a consultation or learn more about our services, contact Schmitt Law, PLLC online or call (616) 608-4634.

Financial Issues

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