Affordable Care Act, Small Business and Self Employed

http://www.denverelderlaw.org/wp-content/uploads/2012/03/Barb_Cashman.jpgHere is an interesting article in which Barb Cashman, Esq interviews Shira McKinley, Esq on the pros and cons of the Affordable Care Act for small businesses and self employed people.

http://www.denverelderlaw.org/the-affordable-care-act-aca-and-the-self-employed-or-small-business-owner-interview-with-shira-mckinlay-esq/

Parents: Don’t drag your children into your divorce depression

Why I primarily focus on the financial aspects of divorce, I do also help mediation clients with their parenting plans.  While, of course, the financial aspects are important to get right for the future financial viability of both parents, making sure that the children are Mother and Daughter Baking Togetherminimally affected by the divorce is even more important.

I ran across this article by Rosalind Sedacca this morning, and wanted to share it.  It includes a good analysis and suggestions for helping children to adjust to the emotional changes and challenges that parents face when going through divorce.

http://www.huffingtonpost.com/rosalind-sedacca/parents-dont-drag-your-ki_b_3412363.html

How to Save Money on your Divorce

 

Divorce can be very expensive.  I read recently that the average cost of divorceAlimony, Spousal Maintenance and Divorce in the United States is $15,000.  Most attorneys ask for a $5,000 – $7,500 retainer per client just to get started.  A business valuation can cost $12,000.  A one day settlement conference with attorneys and a mediator can cost $12,000, not including any preparation. A Parental Responsibility Evaluation can be $7,500.  If you consider that the median household income is around $50,000, the cost of divorce is a significant financial hit on families going through divorce.

Having worked as a divorce financial specialist and mediator for the past ten years, here are some things that I have found help families to save money on their divorce.

Attitude. 

Win-Win v Win-Lose.  Many people, on being told that their spouse wants a divorce, feel hurt, betrayed and angry.  Some want to punish their spouse for wrong-doing.  By taking the attitude that the spouse will pay for wanting to end the marriage – going for the win-lose – will likely result in both of you losing and the attorneys and other professionals involved in your dispute getting paid rather well (with less money for you and your children in the future). By taking the approach of “how can we manage the dissolution of our marriage so that our children and each of us will be OK and have an agreement that we both think is fair”, will result in a less costly and less painful process.

Communicate well with your spouse.  Divorce is basically a life transition event.  With a little help, many couples can work out all the details of their divorce without resorting to litigation.  By taking the high road, and asking yourself “What action can I take that will least likely end in regret?” and “If I do or say this, how will it help me with my goal of a peaceful divorce?” you will save both emotional stress and money.

Avoid Litigation if you can. Understand that using the litigation process to punish your spouse is going to cost you both a lot of money, and the final result will be painful, both financially and emotionally.  You will be unlikely to co-parent effectively if you have been the subject of each other’s testimony in court. Sometimes you cannot avoid litigation because your spouse’s demands are unreasonable and you have to have a third party (ie the Court), make decisions for you, but if you can work together to reach an agreement, it will save you a lot of money and heartache.

Don’t be dishonest with money.  If your spouse suspects you of hiding money or spending money on the wrong things, it can cost a lot of money in legal and forensic accounting fees to track down hidden accounts or money spent for non-marital purposes (dissipation of marital assets).  And, this will contribute to increasing the conflict (and the cost) of your divorce.  It is best to be transparent and honest, and keep the money for yourselves and your kids.

Be willing to negotiate.  Understand your needs and those of your spouse and children.  Try to think through for any position you take, how it is good and bad for you, your spouse and your children.  Understand that the cost of fighting for something may be more than it is worth.

Take responsibility for your own actions.

Know what you can change and what you can’t.  You can only change your own behavior.  You cannot dictate what direction your spouse will take.

Talk to a therapist or divorce coach.

If you have trouble keeping your emotions (and words) in check, are triggered by things your spouse says, or are suffering from depression or anxiety, seek out a divorce coach or therapist who can help you through the divorce process.

Do your Homework.

Educate Yourself.   Read books on how to have a friendly divorce.  Avoid the material on how to “win” or “beat” your spouse in divorce.  These will only fuel the fire for more conflict.

Get your financial records together.   Find out what financial documentation your State requires you to provide to your spouse and get those documents together yourself. Order a projection of benefits if you have a pension plan.  Find/request records of pre-marital assets (such as IRAs or 401(k)s that you had before the marriage).  Organize your records by topic (real estate, taxes, income, bank accounts, investments, retirement, debts, etc), index them, and make copies (for your spouse and your attorney).

Get Advice Early. After you have your financial information together, consult with a Certified Divorce Financial Analyst to get a realistic picture of what you might expect financially from a settlement.  Consult with an attorney about the legal issues and processes that might work for your situation.  Make sure your expectations of process and outcomes are realistic.  You can spend a lot of legal dollars on chasing goals that have very little chance of being achieved.

Start planning your future.  If you have been a stay-at-home Mom/Dad and are the lower earning spouse, then start figuring out how you are going to become economically self-sufficient.  Will you need further education, specialized training, an internship?  What will this cost? Will this require day care for your children?  What will be your projected income once you start working?  Alimony/maintenance will not last forever, so you need to get focused early on what your needs will be.  This will also make the negotiations on alimony go much smoother (and less expensively) as it is much easier to work out a mutually acceptable alimony plan if the receiving spouse can articulate his/her realistic needs.

Try mediation or collaborative divorce.

Using a non-adversarial process is typically less expensive and results in less conflict and better decisions – because you make them yourselves — than litigation.

Choose your attorney carefully.

Usually it is best to work with an attorney who focuses on family law rather than other areas of the law.  Get recommendations from friends and family.  Have a list of questions to ask at the initial meeting.  Get a written fee agreement.  Ask if you can hire an attorney in a consulting role (sometimes known as unbundled legal services) to get their advice, but not represent you to your spouse or the court.  If necessary, you can “upgrade” to full representation if your attempts at getting an agreement with your spouse fail and you need more intensive legal help.

Don’t fight over the children.

Unless there is a good reason why the other parent should have no, or restricted, parenting time, the Court is likely to award something close to 50/50 parenting except for very young children.  Thinking through what is in the best interests of your children, which normally means being parented by both parents, and how their best interests link into what works for both parent’s schedules, will result in a better parenting plan than one that is imposed by the Court.

Don’t fight over household belongings.

Take an inventory (with pictures) of everything and try to work out a fair division of your household goods.  If you need to put values on your belongings, use garage sale prices.  You are both likely to need to set up a new household, so thinking about how that might best happen cooperatively will result in a better outcome.

Money issues.

Retirement Funds. Don’t take money out of your retirement plans before you are divorced.  Doing so can cost you an extra 10% tax penalty, and may mean that you are paying tax at a higher rate on the withdrawal than you would after the divorce.

Business Owner?  If you have a business, your accountant can get together much of the documents that will be needed for a valuation.

Equitable does not necessarily mean 50/50.  It may make sense for one of you to receive more than 50% of the marital pie, due to earning power or short term needs.

Be your own investigator.  If you think there is money missing, review bank statements to see if there have been transfers to unknown accounts or payments to unknown sources.  Are there forgotten retirement plans from previous employers? Find those retirement plan statements from before your marriage.

Monitor the post-separation spending.  Keep your own under control and monitor your spouse’s spending.  If your spouse’s is getting out of control, then it may be best to divide your accounts as soon as possible to protect assets.

A dollar is not always a dollar.  Understand that there are assets that depreciate, and assets that grow.  A car worth $20,000 is different than a mutual fund account valued at $20,000.  An investment account with a face value of $100,000 may have a taxable base which means that when the assets are turned into cash, you will have to pay tax on the gains.  Most retirement accounts consist of pre-tax money, which means when you cash them out, you will have to pay income tax on them.  They are valued differently than post-tax accounts, like Roth IRAs.   Some annuity accounts have riders which make them more valuable than their cash value.  Similarly, pension plans are normally worth more than the “cash value” on the statement.

Keep the House?  It is easy to insist on keeping the marital home.  But, you need to remember that owning a home has a lot of costs in addition to the mortgage and utilities, such as regular upkeep and major repairs.  If you decide to keep the house and then find out that you have to sell it a year later, you will have to bear the costs of sale on your own, whereas if the house had been sold jointly, you would have shared those costs.

No regrets.

Sometimes people just want the divorce to be over, and will make hasty decisions before they have a full understanding of the options and implications.  While this approach might save some emotional energy and professional fees in the short run, you will likely regret over the longer term those decisions you made in haste.  It is much better to take the extra time during the divorce process to make sure you have an optimal agreement that works for you both and your children.

Conclusion.

Having the right attitude and approach to divorce can save you tens of thousands of dollars.  I know many cases that have been completed for less than $5,000 which could have cost $50,000 or more.  Battling it out in court rarely results in a decision that is better than a negotiated settlement when all the financial and emotional costs are taken into account.  However, you need to do your homework, get good advice, and not let your emotions take control of your logical self.

Ways to work with a Certified Divorce Financial Analyst

The Certified Divorce Financial Analyst qualification and role were created to help people going through divorce make better financial decisions.  Many people going through divorce were having difficulty understanding the impact that their decisions were going to have on their future financial situation.
These financials decisions are made whether one is negotiating their own divorce, working with an attorney in a mediated settlement, or unable to agree and having to have the Court make their decisions for them.

There are a number of ways to work with a Certified Divorce Financial Analyst.

1.  Bringing Clarity to Chaos A key way to use a Certified Divorce Financial Analyst is to go alone or with your spouse to just get a clear picture of the financial situation and what the effect of a divorce will have on each of you.  We take all the financial information and look at possible divisions of the marital estate, as well as future spending plans and after-tax cash flow analysis for both parties.  The goal is to see what your financial situations would really look like after the divorce and to help you come up with an agreement, or proposal, that will work for you both given your goals.

2.  Supporting you and your attorney in settlement conference or Court. A Certified Financial Analyst can take all of the financial information in your situation and come up with options and scenarios to help everyone see what possible options are that will lead to a settlement.  I have attended settlement conferences and mediations and using the financial modeling software run proposals and different settlement options so that everyone could see the implications of these options.  This has normally led to a settlement which both parties are satisfied with.   When we have not been able to reach settlement, this work can be powerful evidence as testimony at trial to influence the Judge’s decision on asset distribution and maintenance.  This can be useful whether you are the main bread-winner or the lower-earning spouse.

3. As a Mediator. My practice is focused on working with both parties as a mediator, helping them through all the issues of their divorce, but primarily on the financial issues.  (If there are difficult parenting issues, then I team up with parenting specialist-mediators to help with those issues.)  Using financial modeling tools designed specifically for divorce I can help parties to really understand, in practical terms,  the financial issues in their situation so that they can together make better decisions that they both think are fair and equitable. Many times parties (and their attorneys) who have held a particular position on maintenance, for example, realize that the position is unrealistic given all the circumstances and modify their position and come to an agreement with the other party. The expertise that I bring to the mediation allows me to offer ideas and suggestions to the parties to help them see possibilities for settlement that they may not previously have been aware.

Is Divorce Really a Legal Problem?

At the end of the divorce process, you end up with a legal agreement which is filed with the Court and can be enforced through the Court system, this does not mean that the divorce process needs to be a legal battle – unless you want to make it one.

Divorce is a life transition issue.  If you can agree on all the issues you need to agree on, and stick to your agreement, you don’t need to get involved in the legal system at all (except to file your agreement with the Court).

Most of the issues that need to be agreed on are practical issues.

  • How will you co-parent your children?
  • How will you divide your assets and liabilities?
  • How will you provide financial support to the lower earning spouse to help him/her become economically self sufficient?
  • How will you each provide financial support for your children (ie child support)?
  • What will you do with the marital home?

Many people are able to make these decisions with some guidance and support from professionals. They do not need, or want, a third party (the Court) to make their decisions for them.

The law is there to tell judges and magistrates how to make decisions when you cannot make them for yourself.  Thus, attorneys need to know the law so they can argue your case in front of them, and also guess how a judge or magistrate will apply the law to your particular situation.   If you both agree on the issues, you can decide what you want to decide without court involvement as long as it is in the best interest of your children and the agreement you come up with is not “unconscionable”.

Sometimes there is a power imbalance between the parties or one of the parties is not able to fully participate in the decision-making conversations.  In these cases, having collaborative attorneys assist with the negotiations can help you get agreements that will be fair and work for you both.

Of course, if you are trying to punish the other person, the other person is just unreasonable and will not compromise, or if there is not full disclosure of all the information, then you may not have any choice but to use the Court system.

Helping Children Cope with Divorce

See this  Link to excellent short article from  Miami Children’s Hospital.

Key point is that the degree to which children are impacted by divorce is usually connected to the amount of conflict they are exposed to during the process.  Choosing an adversarial approach to divorce (ie litigation) is bound to increase the conflict and thus the potential damage to your children.  Taking the high road, and choosing a non adversarial approach (not always possible, I recognize) such as non-represented mediation or collaborative, can be a more satisfying process and less expensive process, and more satisfying result, because you are in charge of your own outcomes (not relying on a third party to decide for you).

Divorce and Health Insurance

Divorce and Health Insurance

I was talking with a colleague the other day who told me an interesting story.  When she got divorced, her former husband agreed to provide health insurance coverage for their son, which he did.  When my (self employed) colleague remarried, her new husband wanted to cover her and her son on the policy through his employer as the additional cost was not that much and was really good coverage.  It seemed like a bit of an extravagance at the time, but they did it nonetheless.

Some years later, their now adult son (in his early 20s) got a serious disease and the hospital bill was around $500,000.  No problem:  his father’s health insurance should cover it. Unfortunately, his father had had some serious health issues himself and had maxed out on his benefits.  So, step-father’s insurance coverage was very much needed and paid for all the treatment and long hospital stay.

The moral of the story is that if the children have health issues, or if the parents have a history of health issues, it may be wise to double up on insurance for the children, especially if it is being subsidized by employers.  Many people face bankruptcy in this country because they have to deal with extremely large medical bills because they are, or become, uninsured for some reason.  Sometimes it is better to be safe than sorry.

 

Saving Money During the Divorce Process

There are ways you can save money in the divorce process.  However, you must be careful that if you save too much money in the short term (by not getting good advice), it may cost you dearly in the long term.
1.  Use your brain.  Don’t let your hurt and disappointment drive you to take rash decisions in retaliation.
2.  When advised to do things that will upset or damage your spouse at the beginning or during the divorce process, ask, “how will this affect my ability to achieve my desired outcomes?” and “what will it cost, both in financial and emotional terms, for me to do this?”  For example, does it really make sense to file a temporary injunction against your spouse if there are no real grounds to do so?  Do you really need to take $10,000 from the joint bank account and put it into your own account without getting agreement.
3.  As one attorney told me, if someone tells you something about the law that does not make sense, then it is probably not true.  For example, if you move out of the house where your spouse and children are, but are still keeping contact with your children, you will not be charged with abandonment.
4.  If you can settle your case without retaining attorneys to represent you, you will save a lot of money in professional fees.  You should at least consult with an attorney (sometimes called unbundled legal services) so that you know what your rights and obligations are.
5.  If you get advice from a family law attorney or a Certified Divorce Financial Analyst so that you understand the short and long term financial implications of your potential agreement, then you should be able to make better, more informed decisions and not have nasty surprises one, two or more years down the road.
6.  Get all of the documentation together early  that you are required to provide by the court and have it organized.  If you believe you have a claim for non marital, separate property, then get the evidence you need to support your claim, unless you spouse agrees with your claim without the documentation.
7.  Don’t try to hide assets, or “forget about them”.  It will cost you a lot of money in “discovery” for the attorneys to uncover them.  If it is not found during the course of the divorce, but is suspected later, your spouse can reopen the case – more attorney fees!
8.  You have learned during the course of your marriage how to “push the buttons” of your spouse.  This is not the time to do it.  Think before you speak.   The kinder that you are to each other during the process, the less money you will spend on professional fees and the more likely you will come out with an agreement that you both think is fair. Before you speak, ask yourself these questions.  If the answer is No to any of them, STOP.    Is it truth?  Is it necessary?  Is it kind?
9.  If you need cash, you can often get money from your retirement funds after the divorce without paying the 10% penalty in addition to the normal income tax on the early withdrawal.
10.  Alimony is normally tax deductible to the payor and taxable to the recipient. Child Support is tax neutral.  By increasing alimony you can sometimes save taxes overall and reduce child support.  Both of you could be better off.  Because Child Support is always modifiable by the Court, when alimony ends or reduces, then child support may go up.

Different approaches to divorce

Many people advise their friends and relatives when they are facing divorce to “go get an attorney”.  This is understandable as often the emotions are running high, dreams and hopes have been dashed, anxiety is high about what will happen to the children and finances, trust and communication may be at an all time low, etc.  However, often it is sensible to do some research before rushing off to “have your day in Court”.
While there are many attorneys who will advise their clients on the different approaches to divorce (mediation, collaboration, cooperative, litigation, consultation v representation) and help them to work through their options and the costs and benefits of each (they have an ethical obligation to do so), unfortunately, there are attorneys who do not talk about options other than litigation and thus sell the potential client on a retained representation for litigation.  While there may be some situations that may only be resolved through a litigation approach, the vast majority of cases are not settled in the court room because the parties agree a settlement without the judge being involved.
Attorneys can be hired in two different ways.  They can represent you in your matter, or you can consult with them.  If they are representing you, they are managing your case and have a responsibility to you to help you achieve your objectives.  You will usually need to pay them a retainer if they are representing you.  If you are consulting with them, you are seeking their advice, but you are managing your own case.
Litigation may have benefits, depending on your situation. Your  attorney will take control of your case to gather all the information to make sure that your spouse is not hiding or misrepresenting anything, advise you on what you can expect as an outcome, help you to understand what is going on in the legal process, and represent you to your spouse, his/her attorney, and the Court to try to achieve your objectives in the divorce.  If there is abuse, a large power imbalance, complicated issues, lack of communication and trust, then often litigation is the only way to get the divorce finalized.
Litigation also has costs.  The very nature of the litigation process, the attorney’s ethical and professional  responsibilities to you as the client and to the court can increase costs rapidly at the beginning of the case in order to collect all the information that both attorneys need to get the case started.  If one of the attorneys (or their client) wants to be difficult (like filing a restraining order with little basis), this can escalate the conflict and the costs even more.  The very nature of the legal adversarial process, while designed to resolve conflicts based on law (and some say to find the truth and justice), can damage the relationship between the parents so much that it makes it very difficult to co-parent effectively.
For many people, however, they have made a decision to divorce, have put a high value on minimizing the damage to the children in the short and long terms, and wish to not damage their relationship further through the divorce process. Even though there may be some trust and communication issues, with some help they can work through their issues and come up with an agreement that works for them and their family.  They can be non-adversarial and try to reach an agreement that is satisfactory to both of them, rather than an “I Win, You Lose” result.  Just having this mindset when approaching divorce can save tens of thousands of dollars in professional fees.
Many people find that starting with a mediation process, in which they work with a neutral mediator and each party has an attorney with whom they are consulting, can be a highly effective and a relative low cost way to reach an agreement on even very complicated situations. During mediation, the mediator helps the parties to find their own solutions that will work for them.  Their attorneys may (but not necessarily) be present in person or by phone.   At minimum, the attorneys should be consulted close to the beginning of the case after the financial information has been exchanged between the parties, and closer to the end of the process when agreements are being discussed, but not yet finalized.  They should also review the Memorandum of Understanding (your divorce agreement) to make sure that it is written to reflect your understanding of the agreement.  (Note that this type of mediation is often quite different than a settlement conference, in which an attorney-mediator or retired judge will, in effect, evaluate your case and tell you what a judge would say if it went to court.)
If mediation is not successful in reaching a full agreement, then the parties can increase the involvement of attorneys through collaborative, cooperative or litigation models.

If more involvement of the attorneys is needed by the clients (who perhaps need more support due to a power imbalance or lack of trust), they can enter into a collaborative agreement with their attorneys. Collaborative divorce involves the attorneys agreeing with their clients that they will not represent them in Court, and will work in a collaborative and non adversarial way with the other party and their attorney.  Cooperative divorce is similar except that the attorneys have not agreed that they cannot represent their clients in court, but will try to work in a cooperative way to reach an agreement.  You can find out more about collaborative divorce at www.denvercollaborativedivorce.org.

Who is Steve McBride?

Greetings!
I am a Divorce Mediator and Certified Divorce Financial Analyst (sometimes known as a divorce financial planner).  I am also building a mediation practice focusing on elder care and other senior issues.

While most of my divorce work involves helping couples work through their divorce settlement (both financial and parenting) in a dignified way, I also act as the financial neutral on collaborative divorce cases and as the financial expert on litigation cases.  For more information, see www.divorcefinancecolorado.com.

The development of my elder care mediation practice derives from personal experience as a caregiver for my mother-in-law when she had Alzheimer’s, as well as dealing with a difficult sibling dispute about the care of my mother after her stroke. This area of my practice deals with a wide range of elder issues, including housing and living arrangements, caregiver arrangements, financial management, estate planning, guardianship, elder care transitions and disputes with nursing homes and residential care facilities.  For more information, see my web site www.eldercaremediation-colorado.com.I am a Professional Mediator recognized by the Colorado Council of Mediators and Mediation Organizations (CCMO), a Certified Divorce Financial Analyst, Member (and former board member) of Colorado Collaborative Law Professionals, Member of the International Academy of Collaborative Professionals, a board member of Colorado CASA (Court Appointed Special Advocates) and a member of the Denver and Boulder collaborative law practice groups.

I am a husband, father to Ian and Katie, “bonus dad” to Emily and Annie, grandfather, musician, and artist.

My wife, Jennifer, is a Vice President of Horan and McConaty (www.horancares.com) where she is Director of Grief Support and Community Education.  She is also the Founder of the Heartlight Center, a 501(c)(3) focusing on grief support and professional grief education (www.heartlightcenter.org).

I played rugby for many years in the UK, and upon returning to the US coached the Denver Harlequins men’s team and Cherry Creek high school girl’s team.

Before working in the mediation field, I has a successful career in management consulting, where I was fortunate to help organizations such as Black and Decker, International Paper Company, American Greetings, J. Walter Thompson Advertising, British Gas, Singapore Telecom, BAT, Sun Microsystems, National Westminster Bank, Allied Irish Banks, and the University of Essex. I started my management consulting career with Pittsburgh-based H.B Maynard & Co (one of the oldest management consulting firms in the US, if not the world), and was a consulting partner with Robson Rhodes Chartered Accountants and CEO of Aspen Management Consultants, both in the UK. Most of my work focused on how to improve the performance and productivity of people in organizations through better people management. When I returned to the US in 1999, I worked with what is now DeNargo Capital, a private equity firm owned by my good friends Tom Heule and Pal Berg.
Feel free to contact me at 303 867 1400 or at steve@stevemcbrideconsulting.com.
Thanks for visiting my blog.
Steve