The Benefits of Smiling

Renee - SmileWhile going through the divorce process you may not feel like smiling often.  But, did you know that there are many benefits to smiling, even if you have to force the smile?

Some of the benefits of smiling are:

  1. Psychologists have determined that if your are in a bad mood, you can instantly lift your spirits by forcing yourself to smile.
  2. Smiling can improve your physical health. Your body is more relaxed when you smile, which contributes to good health.
  3. Smiling really is contagious.  In Sweden a study was conducted where they found that people had difficulty frowning when they looked at other subjects who were smiling, their muscles twitched into smiles all on their own.
  4. Your body immediately releases endorphins when you smile, even when you force it.  This sudden change in mood will help you feel better and release stress.
  5. Handshakes, hugs, and bows may have varying meanings around the world, smiling is known around the world and in all cultures as a sign of happiness and acceptance.
  6. Smiles make a person seem more attractive, sociable and confident.  People who smile more are more likely to get a promotion.

And the best reason of all to smile when you are going through a divorce is because:

It will either warm your soon to be ex’s heart and make the whole divorce process easier or piss them off because you are happy; either way you win.

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Updating your Last Will and Testament

Your Last Will and Testament may be your final words to your friends and family.  It is the only way to insure that your wishes regarding your estate will be abide by.  The words and feeling that are in your Will today may not be how you feel in five, ten or twenty years, because your life changes, you as a person change and the people in your life change.

Usually while you are going through the divorce process, by law, you are not allowed to make any changes to your Last Will and Testament.  Unfortunately when the divorce process is completed most individuals do not immediately have their attorney prepare a new will.  If you do not immediately proceed with making changes to your Last Will and Testament you may never have the opportunity to make your wishes known or worse yet you may forget about the Will all together and then 20 years later your family has to deal with your oversight.

Case In Point:  These are true facts and the gentleman involved in this scenario we are going to call George.

George gets married at the age of 17 and had two children.  Ten years later he divorces Last Will and Testament 2their mother and then re-marries.   He then divorces that wife and re-marries again.  Wife #3 blesses George with another child.  After the birth, Wife #3 insists that they have Last Will and Testaments prepared to make sure that their child will be taken care of in the event that anything should happen to either of them.  George tells Wife #3 to have an attorney draw up the wills and he will sign it, because at the time, he agrees with Wife #3 about the need for a Will.  Wife #3 contacts her attorney and has the Wills drawn up.  It is unsure as to how closely George reviewed his Will prior to signing, but sign he did.

After approximately eight years of marriage, George and Wife #3 go through a very ugly divorce.  By the time of the divorce George had forgotten that he had signed a Will, and being a bigger than life individual never acknowledges his mortality.

After divorcing Wife #3, George goes on his merry way and never thinks about the Will he signed.  During the next fifteen years he has a couple of long term relationships, his relationship with his two older children heals its self and his relationship with his third child remains intact.  What happens next is heart breaking.

You see, George becomes very ill and was hospitalized.  When he was first admitted into the hospital it didn’t look good, then he started to recover, then another set back, then another sign of recovery.  This went on for 90 days.   During this time his oldest child was handling all the medical issues, communicated with the doctors and would make all necessary arrangement and keeps her siblings and other family members abreast of his condition.  His middle child would see him on an ongoing bases traveling the 100 miles round trip as often as his work and family life would allow.  His youngest child for the first two weeks would stop by for a couple of minutes every couple of days and then the visits became less and less, claiming that she does not have child care for her own child and could not afford the gas and parking fees.  During the last weeks of George’s life his youngest child does not visit at all.

Because of George’s condition his eldest child is appointed his Guardian.  After being appointed Guardian she finds out that her younger sister had withdrawn and spent more than half of all of the cash in George’s bank accounts.  Needless to say these actions caused concerns within the family, concern regarding how is George going to be able to take care of expenses once he is released from the hospital.  Instead of causing immediate family drama the eldest child, being more concerned with her father’s health, for the next couple of weeks works with what she has left.  She inventories his assets, makes arrangement to store his household items and vehicles, pays bills, makes living arrangements for George, in other words spends hours every day taking care of her dad.  Then George takes a turn for the worse and dies.

FuneralUpon his death, Wife #3, mother of George’s youngest child produces the Will that George signed some 20 years ago, leaving everything to his third child and instructing the Courts that his other two children “shall be deemed to have predeceased me”.  The actions of Wife #3 and her daughter were bad enough but the words written in George’s Last Will and Testament “shall be deemed to have predeceased me” cut to the heart and sole of his older two children.

Everyone who knew George was aware of his love for all of his children, he had pictures of them in his office, home and even in his car.  He spoke about them often and during his illness he told his children and others how wonderful they were and how much he loved them.  George didn’t take the time, when he had it, to review and update his Last Will and Testament. George’s older children will always remember his words, while he was in his hospital bed but they will also remember seeing the words “shall be deemed to have predecease me” written in his will.

The moral of this true account is “take the time to review and update your will immediately after your divorce is final and then review it every couple of years after that”. Your life changes and so should your Last Will and Testament.

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What do you really earn?

time and moneyTo figure out what you really earn per hour you first need to calculate how many hours you work in a year.  If you work 8 to 5 with an hour off for lunch you will usually get paid for 40 hours a week which equates to 2,080 hours a year.  Now add to that 2,080 the hour for lunch each day that you don’t get paid for unless you are actually able to accomplish personal chores during your lunch hour.  Then add the hours spent driving to and from work.  Next add the time spent working on “work stuff” at home, entertaining and supporting coworkers or attending work related parties or outings, the time spent shopping for supplies and so on. If it takes you an hour to get to work in the morning and an hour to get home after work, plus the hour that you are not paid for while you are at lunch that is 3 hours per day, 15 hours per week or approximately 750 hours per year taking into consideration a two week vacation.  Your hours attributed to you job is now a minimum of 2,830 per year.

Next calculate how much you earn in a year, including your benefits (you should be able to get this off of your pay stub).  From that, subtract taxes, the cost of commuting (gas and auto repair and maintenance), the cost of work clothes, the cost of day care, the cost of other supplies you need to purchase, and so on.  Anything that you buy for your job, subtract it here.

Then divide the amount you actually earn by the number of hours that you really work.

EXAMPLE:

Your employer tells you that you will get paid $35.00 per hour based on 2,080 hours per year which means your annual salary would be $72,800.00.  You employer will also match your 401(k) contribution up to 3% and you enroll in the 401(k) plan.  Your employer also pays for your health insurance which is costing them $100.00 per month.  Based on this your total compensation would be $76,184.00 annually.  Your federal withholding taxes will be based on the $72,800 less the 3% that you are contributing to your 401(k) in this case we are going to assume the federal withholding is $7,000 annually.

Total Compensation                                                 $76,184.00

Less taxes:                                                                                              $14,753.20

FWT                            $  7,000.00

FICA/Medi                 $  5,569.20

Less 401(k)                $  2,184.00

Less expenses directly related to work[1]:                                      $  9,720.00

Lunches                      $  2,500.00

Clothing                      $  1,200.00

Automobile                $  1,020.00

Day Care                    $  5,000.00

Less health insurance                                                             $  1,200.00

Less Employer 401(k) contribution                                    $  2,184.00

Wages left over for living expenses:                       $44,942.80

Now if you take the $44,942.80 which is what you bring home after taxes and work related expenses and now you will need to divide it by the number of hours that are work related (2,830) your hourly rate of pay is only $15.88.

 

[1]           The lunch expense is based on $10.00 per day.  The clothing expense is based on $100.00 per month.  The automobile expense is based on a 40 mile round trip at 51¢ per mile.  The day care expense is based on $100.00 per week.  All of these expenses are based on a 50 week year.

 

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Start Journaling

JournalWhen someone says “start journaling” it doesn’t mean you have to write a book.  Your journal can be used to make notes about what happened during the day or your feelings throughout the day.  By journaling you may realize that your emotions tumble at the same time every day which can be used as a cue to change your daily routine.

If you have children and there are issues regarding custody you can use your journal to keep track of what is happening with your children, i.e. Dad didn’t pick up the children for his period of possession; Mom was late returning the children; one or the other parent kept the child home from school because they were running a temperature.

Also, use your journal to vent your frustrations.  If you vent your frustrations in your journal you will be less likely to verbalize those frustrations in a negative manner.  You will be able to see if there are any re-occurring triggers and/or themes and hopefully figure out how to deal with the issues causing the frustration.

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Lifestyle Analysis

Having a Lifestyle Analysis prepared before or during the divorce process is not mandatory but may be beneficial.  A Lifestyle Analysis, will review spending records such Banking and Cashas checks, cash withdrawals, bank statements, brokerage account statements, credit card statements and income tax returns.  The analysis will usually cover the three consecutive years prior to the filing of the Petition for Divorce and will cover the actual living expenses of the family.  Adjustments will be made for expenditures such as one time repair bills (i.e. a new roof), the purchase of a car for a child, etc.

In the state of Texas once a divorce action is filed, a Motion for Temporary Orders will usually be filed.  This Motion will include a request for temporary maintenance and/or temporary child support, along with addressing other issues.  When going before the Court you will need to be able to show the amount of support needed through a Monthly Financial Statement or Financial Information Statement.

I have seen Monthly Financial Statements that only take into consideration current expenses.  If expenses that will be occurring in the next couple of months are not accounted for, the parties may end up back in Court requesting additional support.  If this should occur, legal fees increase and tension between the parties may increase.  By having a life style analysis performed, as soon as possible, a lot of time, anguish and money can be saved.

A Lifestyle Analysis will help you accurately determine your monthly financial needs which will assist you in preparing your Monthly Financial Statement.  A Monthly Financial Statement should be based on annual averages of your expenses.  If you are going before the Court in March or April your electric bill for that month may only be $100 but once June and July hit your electric bill may rise to $300 to $400.  Likewise if you have children and file for divorce in August your school supplies may show that you spent $100 when in fact the monthly average may only be $30 per month.  Some common expenses that are totally left off Monthly Financial Statements include the cost of a child’s birthday, the cost of celebrating holidays; Thanksgiving and Christmas, just to name a few.

After a complete review of all the records and statements that have been provided a Reportscomprehensive Lifestyle Analysis report will be prepared.  This report will break out the family expenses by category, and include a comparison of all categories over a three year period.  A review will also be done on the family’s cash flow from all sources (income, investments, businesses, etc.).  After reviewing all income, from all sources, and reviewing all expenses, if it is determined that more money is being spent than is being brought in, the source of funds us to pay for the spending in excess of what has historically been reported as income must be discovered.  At the conclusion of the Lifestyle Analysis, the report will identify exactly how much money will be needed monthly to sustain the marital lifestyle.  This information can be used not only to determine the amount of temporary spousal and child support needed, but also to help negotiate a settlement or to present to the Court if a settlement cannot be reached.

Additional, if it is believed that one party has been contemplating the divorce or the parties have previously filed for divorce you may want to consider that the lifestyle analysis encompass additional years.  Someone planning for a divorce may increase their spending in one area while decreasing in another or start withdrawing more cash than they normally would.  Also, if there is a family business involved, the analysis should take into consideration any and all expenses paid by or through the business that will need to be paid by a spouse after the divorce or when it is determined that the business will no longer make those payments.  For example, if the family business pays the cell phone bill of the family, once the divorce is finalized one of the parties will need to pay for their own cell phone and its monthly charges.  The same goes for automobile expenses.

The Lifestyle Analysis may also then be used to assist one or both of the parties to set up a family budget.  Since you will have a clear understanding of your monthly finances and spending habits you will be able to determine how much needs to be set aside each month to cover those annual expenses like birthdays, Easter, Christmas, etc.

As all cases are fact specific an attorney will be able to advise if a lifestyle analysis is appropriate.

If you still have questions after reading these blog posts, please call Cathy A. Threadgill who will be able to help you with your specific situation.

All articles/blog posts are for informational purposes only they do not constitute legal advice. If you require legal advice, please contact a lawyer licensed in your state. The opinions expressed here are solely those of the author, who is not an attorney.

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Wants and Needs

Wants and Needs for the most part are totally different.  In the literal sense all you NEED to survive is the air you breath, the food you eat and water.  Since we live in modern society you will also need a place to live and cloths which means that you will need a job to cover those expenses.

Luxury Our “WANTS” are what usually get us into financial difficulties.  You may want to eat Filet and Lobster for every meal but you don’t need Filet and Lobster to live.  You may want and feel that you deserve to wear designer clothing but you do not need designer cloths to live.  You may want to raise your children in a multi-million dollar home but they can be just as happy in a home valued in the hundreds of thousands.

While going through the divorce process you have the opportunity to really look at what you WANT versus what you NEED, and this could end up saving you thousands of dollars in legal fees.  Look around your home and determine the difference between what you WANT and what you actually NEED.  You may want the dining room furniture that you and your spouse purchasing for $5,000.  But the question is do you actually need that dining room furniture if it is going to cost you $7,500 in legal fees?

You may WANT to keep the home you are currently living in, for sentimental reasons, but you don’t NEED to keep that home.  The home that you spend thousands of dollars fighting to keep may end up being the majority of your financial division, which down the road you may not be able to afford.  Sure you will have those wonderful memories that you cherish; but you will also end up holding on to painful memories which can cost you emotionally even after your divorce is finalized.

Before you start negotiating your financial future make sure that you have checked your WANTS versus NEEDS.

 

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Reassure Your Children – Weekly Tip

SistersReassure your children, often, that they are loved and that the divorce doesn’t have anything to do with them.  Let them know that, just because, mommy and daddy may not be living together anymore and they may not be getting along your love for them has not changed.

Children are very sensitive to their surroundings and when mommy and daddy are upset they feel it.   Sometimes they will even feel that the problem is because of them, especially if they overhear mommy and daddy fighting about spending time with the children and/or what the other parent is doing wrong in raising the children.

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Get Organized

Get Organized – DFW Divorce Finances – Weekly Tip 

Kitchen DrawerGet organized: it will save you time and money; while going through the divorce process.  By organizing your life you will be better prepared to produce the necessary documents and answer questions that your legal team may have.  Start by organizing something small like a kitchen drawer or your purse.  Organization will also help to relieve some of the stress in your life.

Be aware that when you initially meet with your attorney you will be requested to produce copies of bank statements, tax returns, pay stubs, retirement documents, etc., etc., etc.  All of these documents are necessary to determine the financial outcome of your divorce.  I would recommend that you purchase a thumb drive that has a minimum of 8G of space, this way you can store all your documents in one location.  Whether you are making hard copies or using a thumb drive you will want to set up files relating to the different forms of documents.  Remember the more organized your documents are when you turn them over to your legal team the less time your team needs to spend on organizing them which in turn saves you money.

You may want to being your organization process with getting copies of documents relating to your employment.  Not many people think to make copies of the forms they complete prior to employment or whenever the health insurance carrier is changed so you may need to contact the Human Resource Department to obtain copies of some of these documents.  You will also want to begin saving copies (either hard copies or digital copies) of pay stubs.

File Folders

Get Organized with file folders

If you and your spouse do not keep copies or your monthly bank and credit card statements or have gone paperless, you will want to being downloading copies of the past statements and saving them on an external hard drive or thumb drive.  Most banks allow you to download the past 12 months of statements and since most times attorneys would like to see the past three years you may have to contact your bank to request access to those statements.

If you have community and separate property you will need to find the documents from the date of marriage or to the original purchase.   You would also want to put copies of your separate property documents in a totally different files than those relating to community property.  Finding documents relating to major purchases, like a home, may be a little more difficult to find but if you can narrow down the list of documents you are looking for life will be a lot easier.

To find out more about the type of documents you maybe ask to produce see our earlier articles Request for Production of Documents #1 and Production of Documents #2.

For a more in depth look at how to organize your life see our earlier article Jump Off the Divorce Hamster Wheel.

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New Year Resolution

New Year Resolution

What is your New Year Resolution?  Is it to get through the divorce process by the end of the year?  Is it to loose those unwanted pounds that you have put on during the past couple of months? Or maybe your New Year Resolution is to be a happier person?

If your New Year Resolution was to loose those unwanted pounds there are many things Warren Goldswain1that you can do to succeed; you can diet or exercise or do both.  What you don’t want to do is to set yourself up for failure.  Start out by setting a realistic goal.  If you convenience yourself that you can loose those ten extra pounds in 2 weeks you are setting yourself up for failure or to loose those pounds and then turn around and put them right back on.

The first thing you will want to do is decide what is the best way to start loosing those unwanted pounds.  I personally enjoy simply walking.  Walking is probably the cheapest form of exercise because all you need is a part on good walking shoes.  Walking is also something that you can do at anytime of the day and you can do it anywhere.  I like to start my day out with a walk on then wind down my day with a walk, and I enjoy walking outside.  Walking outside you are able to fill your lungs with clean air, you are able to enjoy the site around you, which can change daily and you absorb Vitamin D naturally.

Now before you start making excuses as to why you can’t walk on a regular bases let us take a look at those excuses:

  • “It’s too cold” – No one is saying go for an hour long walk, all you need to do is bundle up and walk around the block, at least you are getting out of the house and moving.  You are getting your blood flowing.  When you get back to your home your checks will be rosy and you will feel exhilarated.
  • “It’s raining” – Well as a doctor pointed out to me – walking in the rain is no different than taking a shower, except that you are clothed.  If you don’t want to get your clothes wet then purchase an in-expensive plastic poncho.  Again, no on is saying you should go for an hour long walk.  Also, it usually doesn’t rain all day and if you feel it is a must you can always to to the closest Mall and walk the Mall.
  • “It’s to hot” – I will admit that in some parts of the United States it get real hot and during the summer it may feel that it never cools off.  Well, again no one is saying to walk for an hour or more but depending on your physical condition even a fifteen minute walk may be difficult.  You may want to look at some of the products on the market that you wear around your cooling points on your body to help you stay cooler. One product line are the Kooler Kollars™ for People.
  • “I’m too busy” – It is so easy to make this excuse, especially if you are going through a divorce.  Between your job, your kids, and everything your legal team wants you to work on you may feel overwhelmed.  Well if you dedicate 15 to 30 minutes a day to walking you will find that your mental attitude will change, which will improve your attitude towards your job and will give you more energy to work on the items your legal teams wants you to work on, and as for the kids – well get them out there with you.

Well now that we have addressed all the reasons why you can’t start with the simplest form of exercise, walking – I hope to see you walking tomorrow and every day there after.  Remember start with a small goal and work your way up.

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IRA One-Rollover-Per-Year-Rule

Can the “IRA One-Rollover-Per-Year-Rule” affect the division of property?

The IRS new rule “IRA One-Rollover-Per-Year-Rule” may affect the division of property in a divorce.  We use to think that dividing an IRA was simple, there was no need for a QDRO, just the language in the Divorce Decree.  Well, effective as early as January 1, 2015 an individual will only be allowed to make one rollover from an IRA to another (or the same) IRA in any 12-month period.  You will, however be allowed to continue to make trustee-to-trustee transfers between IRAs.  You can also make as many rollovers from traditional IRAs to Roth IRAs as you want.

The Tax Court recently held that you CAN NOT make a non-taxable rollover from one IRA to another if you have already made a rollover from any of your IRAs in the preceding 1-year period (Bobrow v Commissioner, T.C. Memo 2014-21).  Following this decision means:

  • You must include in gross income nay previously untaxed amounts distributed from an IRA if you made an IRA-to-IRA rollover in the preceding 12 months, and
  • You may be subject to the 10% early withdrawal tax on the amount you include in gross income.

Additionally, if you pay these amounts into another (or the same) IRA, they may be:

  • Excess contributions, and
  • Taxed at 6% per year as long as they remain in the IRA.

The IRS indicates that this change will not affect an individual’s ability to transfer funds from one IRA trustee directly to another, because this type of transfer isn’t a rollover.  Per the IRS the one-per year limit does not apply to:

rollovers from traditional IRAs to Roth IRAs (conversions)

  • trustee-to-trustee transfers to another IRA
  • IRA-to-plan rollovers
  • plan-to-IRA rollovers
  • plan-to-plan rollovers

If you are in the process of settlement negotiations, and were expecting to have a final trial or mediation after January 1, 2015, you will want to take this change into consideration.  If your trial date or mediation is already scheduled contact the trustee of the IRAs and determine 1) what type of IRAs you are dealing with, 2) if a party can open an IRA and have funds transferred into the new account without being considered a rollover, 2) if your client is eligible to open the IRA in their name or in the name of their spouse, 3) how long it will take to set up the new account, 4)  if they have a standardized form indicating that the action to be classified a transfer and not a roll-over, 5) what is the verbiage that needs to be in the divorce decree for this action to be classified a transfer and not a roll-over.

If your client is the receiving party and they are not allowed to set up an IRA through that particular trustee they will need to contact another institution and find out exactly what they will need to do to accomplish the division to be classified as a transfer and not a roll-over.  If it is deemed that no matter how the division is handled your client will be affected by the “IRA One-Rollover-Per-Year Rule” you will need to adjust the value based on the potential tax risk.

Below is the current IRS ROLLOVER CHART:

Rollover Chart

 

 

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