Divorce

Dissipation Revisited

Divorce, Finance, Mediation

Dissipation Revisited by Rachel Alexander{6:36 minutes to read}  Dissipation occurs when one spouse spends marital funds on something that has nothing to do with the marriage. It could be deliberately offshoring funds into a secret bank account in preparation for divorce. It could be spending marital money on a clandestine relationship such as an extra marital relationship.

This last example is the focus of our article. It is a scenario fraught with emotion and difficulty. From my analysis, the trouble comes in when we’re trying to address a complex, multidimensional problem with a one dimensional monetary solution. In divorce, dissipation can be addressed by identifying monies spent outside of the marriage and returning them to the marital estate.

Let us take Willa, for example (a fictitious person with an almost fictitious name). During an unhappy time in her marriage, about a year before moving for divorce, she had an affair with another man. She bought a boat for the sole purpose of spending afternoons on the lake with him. In the divorce, it was discovered that she had spent $20,000 on the boat, taken from the joint marital checking account. The husband had never seen the boat much less benefitted from it. The cost of the boat might constitute dissipation, and the wife, Willa, would need to return the $20,000 to the marital estate. In the event she does not literally have the funds at her disposal, it would be offset from another asset or otherwise credited to the husband in equitable distribution.

Here is the rub. $10,000 of those dollars are Willa’s to do with as she wants. In general terms, if it has been a long marriage, the marital estate would be subject to equitable distribution at something close to an equal proportion (i.e. 50/50). If the claim is found in the husband’s favor and Willa is ordered to make him whole for the extra-marital expenditure, the $20,000 goes back into the marital estate to be divided between both of them. The husband, therefore, is only entitled to $10,000.

While that might help equalize things in a certain way — returning money that was otherwise essentially misappropriated or wrongfully taken from the marriage — it would seem to our fictional husband that he should be returned the full $20,000. Why should Willa have gotten any part of that to enjoy outside of the marriage? Why should he not be entitled to more than just $10,000? Why is there not some kind of penalty because of Willa’s “bad act?”

Here is the other rub. There is no legal remedy that neutralizes a betrayal or breach of trust. If something is stolen, and then returned, the victim is still not relieved of the experience of being robbed. There is no adequate legal remedy to heal the human heart. When a return of monies is conflated with anything more than a financial restoration of sorts, there will be no satisfactory resolution.

In divorce, there is no monetary reward for the wronged party. The only clumsy remedy we have for a marriage that has unraveled past repair, is divorce. A good divorce can fairly distribute material assets, but cannot deliver fairness into non-quantifiable matters.

If you do not want to have pain and suffering, do not get married. If you do not want to waste money, do not leave the house. This is sort of the pay to play. When you get divorced, you do not get the marriage you should have gotten. All you get is an end to the very human, flawed marriage that you had.

None of this may be terribly palatable, however, keeping the following in mind may prevent dissipation issues from becoming entirely poisonous: more often than not breaches of trust, including infidelity, do not occur in a vacuum but rather in the chaotic, complicated world. While the direct actions of one party might be “blameworthy,” often this viewpoint can only be maintained by looking exclusively at one corner of a very large picture. Though certain acts have been codified into law, most marriages are comprised of a range of actions and reactions, loving, heroic deeds and thousands of blunders and missteps. Most of what occurred does not bare tangible evidence that can be addressed legally or financially. But most often, the fabric of any particular marriage, including its frayed bits, is comprised of the contributions of innumerably hued threads woven by both people into the relationship they made together.

Though blame might feel momentarily vindicating, it provides no sustainable relief or ease. Fueling it is often at the expense of establishing a more comprehensive, balanced narrative. A truer narrative is one that includes room for historical intricacy and respect for the inherent, universal puzzlement of being in relation to one another. When there can be a willingness to share responsibility for what has happened — not bear all of it, but allow for the importance of your inclusion as a participant — a sense of empowerment can return. While this suggestion may seem paradoxical, a shifted perspective can help restore a sense of efficacy, which is particularly needed when broaching difficult consequences and unwanted outcomes.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

A Triumph for the Best Interests of the Child

Divorce, General, Mediation, Parenting

A Triumph for the Best Interest of the Child by Rachel AlexanderThe Overruling of Baures by the NJ Appellate Court

{7:12 minutes to read}  Relocation is among the most difficult family law issues for families and courts. Relocation is when the parent with sole or primary residential custody chooses to move out of state with the children. The change in parenting roles and developments in attachment theory, along with other areas of psychology are reflected in a recent court decision. The case of Bisbing v Bisbing went to the New Jersey Appellate Court about the issue of relocation.

In the case of Bisbing, the parties mediated their divorce, including agreeing to a parenting schedule for their twin daughters. While the parenting schedule reflected the mother having more overnights than the father, the father had significant weekly parenting time. He was integrally involved with the girls, coached their ski club, and had regular weekly parenting time.

The mediated Marital Settlement Agreement included language whereby the parents acknowledged that a move of either parent of a significant distance, in a manner that would dramatically affect the children’s access to both parents, would potentially impact the children negatively. The agreement stated that the parties recognized the importance of both parents being involved with the children in the manner proximity enables.

In this case, not long after the parties divorced, Ms. Bisbing notified Mr. Bisbing that she planned to remarry and move to Utah with the children. Had Mr. Bisbing consented, the matter would have ended there. Without the consent of the parent of alternate residence, the matter went to court.

The initial court granted Ms. Bisbing’s request to move with the children, presumably following the analysis under Baures v Lewis, and Mr. Bisbing appealed this ruling.

The Baures analysis follows:

Provided the custodial parent is relocating in good faith, for legitimate purposes – such as remarriage, availing herself of more family support, or a substantial employment opportunity – and not for the sole purpose of denying parenting time to the non-custodial parent, the court generally permits relocation. The reasoning is that the custodial parent should not be so restricted by her parenting obligations as to prohibit her enjoyment and enrichment of life. As the custodial parent achieves and accepts new opportunities, so too, the reasoning goes, are the lives of the children improved.

This rational made good sense in the days when one parent, typically the mother, would have close to 100% custody of the children, with the secondary parent being perfunctorily, often minimally involved. In such instances, it would be profoundly unjust to limit the primary parent’s mobility and ability to get on with her life merely to ensure the non-custodial parent a continuation of nominal parenting time. The Bauers analysis provided the moving parent a wide girth – provided the move would not cause inimical harm to the children, and the court would generally permit the relocation.

The Old Standard for Relocation

One of the issues in this case was whether the mother knew she wanted to move away with the girls and did not negotiate in good faith during the mediation. The Marital Settlement Agreement, the result of the mediation, included a provision about relocation stating neither parent would relocate more than 20 miles without the consent of the other parent. There was other language stating that the parents acknowledged that living within proximity of and having access to both parents is deemed to be important, and that relocating might detrimentally affect the children’s relationship with the other parent.

The New Standard: From Inimical Harm to Best Interest

In the case of Bisbing, Baures was overturned by the Appellate Court. This case reversed the looser standard of inimical harm to the child, in favor of the new standard: whether the move would be in the best interest of the child. This new analysis shifts the burden to the moving parent not only to show that the move is in good faith, but also to show that the move is in the children’s best interests. This showing needs to outweigh the presumption that the children are generally best served by having regular access to both parents. The new analysis also no longer rests on the presumption that what is good for the primary custodial parent is necessarily best for the children. In Baures, the analysis was the much lower standard such that if the move would do no harm to the child, it was permitted.

Important input from the therapeutic community says that children are served generally by having significant access and opportunity to build stable relationships with both parents, and that involvement of both parents in raising the children is optimal. This also reflects the changes in parenting that the last decades have seen, with more equal parenting time favored and 50/50 custody often being the norm. As the social, familial structures evolve, so inevitably does the law.

A final note: A couple years ago, a family judge fairly new on the bench, disclosed that relocation cases are the toughest and most gut-wrenching cases over which he presides. There is no outcome that leaves the parties untouched by some loss. On the one hand, this change may limit a divorced parent’s ability to get on with their life by remarrying, moving, or taking advantage of opportunities available to him or her. On the other hand, the non-moving parent and the children could be denied the fundamental opportunity to share these very important growing years, and may forfeit the opportunity to forge the sort of attachment that endures and provides a vital resource for a lifetime.

We will continue to see the law on this complex subject develop. Importantly, the needs and best interests of the child are perhaps being allotted the gravity they deserve.

Stay tuned.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

 

The Focus Oriented Divorce Has Arrived

Divorce, Mediation

The Focus Oriented Divorce Has Arrived by Rachel Alexander{2:30 minutes to read} I am pleased to announce the completion of my certification as a Focus Oriented Professional, and a Certified Focusing Trainer. The certifications are the culmination of over two years of study, learning, and practicing. I have often made mention of the focusing training, teachers and the Focusing Institute in my blogs. Focusing can offer immediate relief to the divorcing populous through its many accessible tools. I’m excited to introduce it to those who would benefit so much from it — particularly those traversing their divorces.

I look forward to exploring this together through articles and attunements (soon to be available on the website). Attunements, much like guided meditations from a Focusing perspective, will be available as audio blogs that can be listened to at your leisure. They are offered as another tool for support, integrating the Focusing approach with the challenges of divorce. I hope to soon be offering some podcasts and blog interviews with premier practitioners in this field.

Focusing concentrates on how change occurs. Change is the reason people seek treatment, and the inability to change is why treatment fails. Other therapeutic approaches delve into insight, analysis and causation, and though often result in clients gaining understanding of what went wrong, offer no clear way forward — no transformation, no way to live differently. The intellectualizing of issues and identifying their origin does not automatically, alone, result in resolution. Clients are often left with insight, but without relief. Focusing operationalizes a process required for change. Not just theoretically, but in real time.

Focusing has informed my mediation practice, and will now be even more substantially incorporated into the support group meetings, and the services offered by Alexander Mediation Group.

As we support you on the journey from here to where you are headed, I am dedicated to learning more of what would be most useful to you, and welcome your questions, comments and requests.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

Pathology Pointing: Why it Doesn’t Work in Divorce

Communication, Divorce, Focusing, Mediation

Pathology Pointing: Why it Doesn’t Work in Divorce by Rachel AlexanderWhat is the difference between Pollyannaism and a Balanced Realism Approach?

{4:36 minutes to read}

Pathology Pointing

Our western medical model is pathology-based; our biology is organized around identifying problems. Evolutionarily, problems = danger. But could there be usefulness to hanging out in what is working? This takes a kind of courage — perhaps to overcome some fear that issues will get bigger or take over if you don’t keep watch over them. Who will do the worrying if I take a nap?

The question is this: can we turn towards what’s good even while there is bad stuff going on? This requires tolerance and vigilance. Can we rebuild healthy tissue to overwhelm the unhealthy cells? Can we implement this as part of our strategy even while eradicating the cancer? This reshaping brings more possibilities than dead ends. (Which reminds me of my hair — see how the negative comes right up?!)

In addition, focusing on one or the other’s pathologized or problematic behavior usually just results in vilifying one person and victimizing the other, positioning the parties in defensive, adversarial postures. We are not ignoring any of the problems, rather we are addressing them in a potentially more effective way.

What’s Right?

Why don’t we ask this question at least as often as we ask what’s wrong? In order for something favorable to take hold, it needs our attention. Literally. It needs about 1-2 minutes to imprint on us and become a resource we can recall. So says positive psychology. Whereas negative experiences imprint automatically and remain with us always, favorable experiences must be consciously attended to in order to root.

In divorce mediation, exploring what is already working is often the most important time spent. We know there is a lot that hasn’t functioned well; after all, we’re here. But often there is much that operates well. When we locate that, we have a blueprint for what can be built.

How to Focus on Strengths

Here are a few lines of inquiry that help people establish a way into what works:

Tell me about a time that:

  • You felt heard by your spouse;
  • Your spouse came through for you;
  • He or she demonstrated great parenting;
  • You were relieved the other was there; or
  • You functioned well as a family.

What are you most proud about? 

  • The way your children relate to one another and each of you?
  • How your kids are developing as students? As individuals?
  • The ways you and your spouse have provided for/nurtured/guided them?
  • How you both are handling the current conflict?

This focus serves multiple purposes. It helps people re-organize their thinking by turning their attention to what they have done well in the past and what they have now that’s worth protecting. Someone focusing on what they do have is likely to want to blow things up as an expression of their anger and grief, taking the family down with them; they are more likely to attend to what is valued. This approach transforms into positive self-regard and self-efficacy — two things much needed in divorce. Additionally, it helps people identify what each party calls successful or functional, and then dialogue about it, developing common ground.

Like anything new, shifting focus takes discipline, and the development of new muscles. Most of us are pretty toned in the complaining portion of our anatomies but are a bit flabby in identifying what is going well.

Even rewiring a room takes skill, patience and some expertise. Rewiring our minds is a much bigger job. Our minds, in fact ourselves, are far vaster and more miraculous than any structure, so be kind with yourselves as you begin to remodel your own interior.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

 

Ungrateful and Pissed Off? A Curmudgeon’s Survival Guide for Thanksgiving

Divorce, General, Well-Being

Ungrateful and Pissed Off? A Curmudgeon’s Survival Guide for Thanksgiving by Rachel Alexander{6:00 minutes to read}

Don’t look now, but here comes Thanksgiving!

When you are already in survival mode, a holiday can add insult to injury. If you are bracing for the holidays as a newly divorced family, maybe spending your first Thanksgiving without your kids or extended family, “celebrating” anything can seem absurd. Forced festivities can increase the sense of what’s missing and highlight not only what you are not grateful for, but what you’re actually pretty pissed off about.

During the holidays there is an expectation or even social insistence that you feel one thing when you’re actually experiencing quite another. That disconnect can be difficult to tolerate much less navigate. Here are just a few recommendations to normalize this experience and help us all get through the holiday intact.

1. Take it in small bites; which is also good advice for your digestion on this holiday anyway. How you may or may not be feeling this holiday is no indication of how you will feel in a week, a month, or for any other Thanksgiving hereafter.

Be invited to back away from a sense that this experience is prescient of the rest of your life. It is just right now that needs to be dealt with. And deal with it we will!

2. Trying to force yourself to feel anything other than what you’re actually experiencing tends not to work. It also tends to be a way of devaluing and negating yourself, and that’s something most of us do not need a repeat experience of.

Rather than forcing yourself to contrast how you would like to be or feel with how you actually feel, put your attention on being kind to yourself as you would a dear friend or beloved pet. Keep this simple. Check in with yourself frequently. Make yourself a cup of tea. Even treating yourself with more patience by giving permission not to rush is a kindness we rarely afford ourselves.

3. Do something that will distract and give your overstimulated emotions a break. Whether that’s watching a funny, stupid, scary or thrilling movie, or hiking with a group through the woods, do something that introduces another aspect of your capacity and emotional range. This can help create internal space and balance in a way that focusing on what’s wrong cannot.

4. One of our best resources is our own bodies. A simple, effective way to ground yourself and manage difficulty is through bodily awareness. A little bit of movement and physical activity can be enormously helpful. Even tapping your left then right foot several times while bringing your attention to the sensation of contact with the ground beneath can help stabilize run-away emotion. The body returns us to our connection with the earth and this moment.

5. Be here now. Focus only on this moment; this hour, what you’re doing now, staying away from a global interpretation, because our minds tend to go there when we’re feeling distraught.

6. Finding our way to gratitude when feeling like a curmudgeon is more like it. Let’s interact with gratitude by keeping it small and specific:

What am I grateful for right this minute?

It might be that you have a cell phone. It could be that you don’t have a cell phone. It could be that you have feet, if you have feet, or that you have a car that you were able to drive wherever you needed to go. It could be that you’re able to breathe easily and are over last week’s cold.

The act and importance of gratitude has more to do with reorienting ourselves to experiencing the fullness of what we already have rather than doing an actual tally. It’s a shift in how we relate to what is already here for us. It can be simple and basic; the sun rose and the moon is still held in the sky.

Or perhaps it can be wildly inventive. I for one am grateful I’ve never had to undergo an exorcism or be aboard an alien spacecraft (although some who know me may think that’s how I arrived here). I’m grateful not to be a giant octopus or sardine (they may be perfectly joyous but I think I would be cold).

All of these are just suggestions to help you navigate if you’re having a rough go during the holidays, particularly during Thanksgiving, when you might be put upon to identify what you appreciate.

This is holiday first aid.

If you’re having a marvelous holiday, good on you! You can disregard all of this. Feel great and rejoice! Extend extra kindness to those who need it.

Wishing everyone peace and love, now and in the future. A grounded, supported, and above all gentle Thanksgiving to all.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

 

The “We Space”

Divorce, Focusing, General, Mediation

The "We Space" by Rachel Alexander{4:12 minutes to read} The “we space” is what is created when two or more people are in a relationship. A couple has a different energy than each person on his own; a family has a whole dynamic greater than the sum of its parts.

Sharing a story about your day might be a different experience depending upon who you are telling. Recounting to your 15 year-old, your best friend or a work colleague will be a whole different thing. Not only might you use different language, emphasize different aspects, frame the story so it’s relatable to your audience, but your experience of being heard and being with your listener will vary.

Even a non-verbal experience, like watching the same movie, would have a whole different feel if shared with your wife as opposed to your ex-girlfriend. You are ostensibly the same, the movie is unchanged, but the experience is affected by the “we.” The difference has to do with whom you share the experience. Not only your sense of who you are while with the other, or your sense of who the other is, but all of what is created in your being together – the something between the two of you – the relatingness itself – which has its own particular quality. In fact, when couples choose to divorce, it often has to do with a deterioration of their “we space.”

“Me Space”

How we pay attention to ourselves and stay tuned-in and online with ourselves is the “me space.”

“Ooh! I’m getting a – I don’t know. I know we just walked into this restaurant, but I’m getting a weird feeling here. You know what, I’m gonna check out the menu next door.”

“You Space”

The “you space” is the other person, who is a whole kind of mystery and universe unto themselves. Often we are attracted to people who have an intricate and unique “me space,” where they are managing their own stuff in a particular way that appeals to us.

A relationship is more than the people inhabiting it. It is the relating that occurs between them. What happens when we sit down together on the sofa and engage? What is created between the two of us that is neither me nor you? We are both the players, contributors, but there’s something else. Almost like a child that is created between the two of you; without both of you it would not be there, and yet it’s neither of you. It is distinct and can, and ought, be treated as such.

The “We” of Divorce Mediation

The “we space” provides an opportunity in mediation. The “we space” is sans blame, sans judgment. Without the focus on what is who’s fault.

When we focus on what is between the two of you – two people in conflict, often in pain – we can begin to work with something much more malleable and faultless then either of you, your shortcomings or past foibles. In shifting our attention from each of you as separate entities, to the relating born of the two of you, we have an entry point for our work, and can begin to engineer something new together.

Like copilots of a ship, a Relation Ship, rather than determining who must walk the plank, we can direct our course towards the brightening horizon.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

 

Blame – Divorce’s Unfriendly Bedfellow Uncovered

Divorce, Focusing

Blame - Divorce’s Unfriendly Bedfellow Uncovered by Rachel Alexander{5:06 minutes to read} Let’s lift the blind on blame. If blame had a whistle blower, what would he say?

BLAME – What is it really about? I get aggravated when a news story breaks and the first minutes concern themselves with who is to blame rather than what happened and what’s being done in response.

Assigning blame is a lot of fun in murder mysteries, WhoDunnits, and so forth; however, in real life, I thought blame served next to no useful purpose whatsoever. I got to thinking about how I steer well clear of the word and concept in mediation, yet I am continually pulled towards it as if by my ill-aligned car (for which I blame my mechanic).

There is a lot wrong with blame. It usually lacks compassion, is rich in judgment, and is packed with hostility and animosity. If blame were food, it would be an organ meat.

Yet blame we do. So rather than blaming blame, I took my own advice and got curious about it.

What is the purpose of blame?

I. Order and Safety

I think blaming might serve a function by helping us organize chaos and try to make sense of a situation that challenges our concept of order, the social compact, expectation and entitlement. When terrorists attack, we first want to know who is responsible. Where did the violence come from? Who is our enemy? Is more violence coming for which we must stand at the ready? We are designed to identify danger with precision. This is derived from that primitive, survival brain that first wants to know the “threat” so it can respond and protect us accordingly.

Blame is called upon when something defies our understanding of the order of things. How do we regain a sense of control? Blame! Distinguish the incident and sort out who did wrong rather than embracing a disturbing sense of general wrongness and powerlessness – that things just happen as a result of other things that happened. That our control is often eclipsed and mostly illusory.

II. Realigning with the Other and Closing a Distance

In divorce, the injured party often wants to have a [perceived] wrong acknowledged by the wrongdoer. Assigning fault, and getting consensus on it, rebuilds a shared narrative that was ruptured by the wrongdoing. This may be necessary to help the injured party regain her footing. A marital injury often has two parts – the harm from the act itself, and then the alienation from the spouse-transgressor. Blaming can be an invitation to connect – to step into the same reality by accepting the same analysis of the situation: you cheated on me and hurt me, which ended our marriage and disadvantaged my future security. Often there is a lot of blame to go around: you punished my job loss and career change by withholding sex for the last 11 years; you rejected me – only after your wrong did mine take place.

The good news is, the more blame, the more opportunity for repair.

Blame seeks acknowledgment and consideration. When we react to blame by dismissing, diminishing or rejecting it, we tend to increase its hold. In divorce, blame seeks a process that requires the other party’s participation. It does not mean the other must accept or receive the blamer’s version of events, only make room for it as the other’s current reality and evidence of his or her current grappling to make sense of the situation. When one spouse refuses to hear the experience of the other, to try to understand how it affected her well being, it can be another injury, another abandonment. But this one is avoidable. In the controlled environment of mediation, the blame can be expressed and tolerated. Once it’s seen, invited in and regarded, it often can recede if not resolve. This benefits both parties – the blamer and blamee. Blame addressed can be blame contained. Unidentified, it bleeds into every other issue – from alimony to equitable distribution to child custody.

III. Reform Reality to Meet Expectations and Values

Blame seeks to make things fair, to equalize or restore/heal what was lost. To reorganize what has happened into an established and manageable sense of the world. The breach took something from me; how can it be restored in some way, even a symbolic way? Even when the root of the “wrong” can’t be healed (the affair was had, the savings lost), the collateral damage often can be, by first allowing space for the other to relay his experience, simply to hear it without pushing it away.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

 

Happy to Announce…

Divorce, Mediation

Happy to Announce ... by Rachel Alexander{3:12 minutes to read} I am pleased to announce that on June 22, 2017, I became of counsel to the firm Gruber, Colabella, Liuzza and Thompson. This is the culmination of a long relationship with the first named partners, Mark Gruber, Esq. and Chris Colabella, Esq., who have been my go-to people since I began in the field almost ten years ago. They have practiced matrimonial law for 40 and 29 years, respectively, and are not only experienced but excellent at what they do. This firm has been my first referral when clients need a review attorney or representation in litigation.

Mark Gruber is well know for teaching countless Continuing Legal Education (CLE) courses for lawyers.  Mr. Gruber, with partner Natalie Thompson, Esq., publish and lecture statewide the Family Law Practical Skills Series for ICLE.

The firm is a strong and capable one, with attorneys who are adept, client-centered, and experts in matrimonial as well as other areas of law. Their outstanding support staff is highly trained and effective. Together with the attorneys, they are able to streamline workflow and keep costs reasonable and fair for clients.

As of counsel, my focus will remain on mediation. I will continue my own practice and collaborate with Gruber, Colabella, Liuzza and Thompson if or when a case goes into the contested arena requiring trial and motion practice. Through our affiliation, my clients will be able to continue working closely with me while benefiting from the resources and breadth of experience of the firm.   

This fall 2017, my colleague, Daniel Agatino, Esq., a member of the firm, and I will be rolling out a podcast series with a goal of providing another accessible resource to our clients and the community.

With an office in Hopatcong and another by the courthouse in Newton, Gruber, Colabella, Liuzza and Thompson has been providing excellent service to the residents of Sussex County for over two decades.  As my practice area spans Essex, Union, Morris, Hunterdon, Somerset, and Middlesex Counties, our affiliation will allow us to serve a larger geographic area and increase our ability to help more people. I look forward to serving current and future clients with this expanded resource base.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

 

“Someday” and “Maybe” Numbers: The Challenge of Dividing Retirement Assets Part 3

Divorce, Finance

“Someday” and “Maybe” Numbers: The Challenge of Dividing Retirement Assets Part 3 by Rachel Alexander{4:00 minutes to read} In Part 2, we discussed marital vs non-marital retirement assets and how some of those assets require an actuary or other expert to figure out the “present value” before the asset can be divided.

We now arrive here: How do folks equitably divide these assets? Particularly because the present value doesn’t actually exist in a divisible form. It’s a theoretical, projected number!

Below are some popular options:

QDRO (NJ QDRO Overview)

A court order goes to the plan administrator, directing it to divide the asset in the way set forth in the order. This method avoids any tax consequences pursuant to this division at the time it is made. When the plan participant retires, each party receives a monthly sum directly from the plan administrator, as if each had a separate pension. Once this is complete, the parties need not have contact with one another regarding distribution as the administrator manages this directly with each party.

Offset Against Other Assets

Sometimes parties chose not to divide the retirement asset at all, and instead trade its value against another asset. For example, maybe there’s $200,000 of equity in the marital home (the husband and wife each entitled to $100,000) and $200,000 present value in the pension to which each party would be entitled to $100,000. The husband might keep the pension and wife keep the marital home. Admittedly, these are different asset classes; however, part of equitable distribution is not just halving the baby but identifying workable solutions aligned with the family’s particular needs and choices at the time.

Life Insurance Policy

A bit more creative, instead of dividing the pension at the time of divorce, the parties agree that when it is in payout status, the recipient will pay a portion to the alternate payee directly, perhaps as alimony or equitable distribution, depending upon tax consequences and legal restrictions. Parties might choose this option for two reasons:

  1. The monthly amount is not discounted by the administrator, the way it would be if it was divided into two separate pensions pursuant to a QDRO.
  2. The parties avoid the costs of a QDRO, which, though not significant, can increase the costs and timetable of the divorce.

To compensate for the risk taken by the alternate payee – one of which is that the participant spouse dies before reaching the date of pension payout, forfeiting the entire pension – the participant will obtain a life insurance policy benefitting the alternate spouse in an amount that will replace the pension payments in the event of the participant’s death. Having the life insurance covering at least some of the risk is an essential part of this approach.

Conclusion

Informed decisions make for better agreements and a better night’s sleep. Knowing the values of assets, even if you ultimately wish to waive any interest you have in them, is good practice. It helps with clarity and can inform other aspects of your agreement. Divorce is laden with pitfalls that can lead to regrets, nausea and insomnia. In my opinion, taking the additional time and making the investment to learn the values of potentially significant assets can help people sidestep all three.

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305

“Someday” and “Maybe” Numbers: The Challenge of Dividing Retirement Assets – Part 2

Divorce, Finance

“Someday” and “Maybe” Numbers - Part 2 by Rachel Alexander{4:00 minutes to read} Just because we determine a value for something does not mean we divide it! Often spouses are concerned that the mere mention of an asset puts it on the auction block and forfeits their exclusive rights to it. Not so!

Getting a comprehensive picture and value of ALL assets is an important part of creating a solid settlement agreement. An agreement should even specify assets whose separate nature is undisputed, with the other party waiving any rights, title or interest thereto. Full disclosure helps an agreement stand – stopping either party from claiming he entered into the agreement without full knowledge of the vital facts upon which he relied.

Retirement assets can be complex; difficult to understand and value. Determining the portion of an asset that is actually subject to equitable distribution is one of the intricacies parsed out below.

Marital vs Non-Marital

If the parties were married for the entire time the participant [in the retirement plan] worked and the pension plan was in effect, its whole value is marital, and the “alternate” spouse will be entitled to an equitable share. Depending on multiple factors, including the length of the marriage, this share could be as much as 50%.

Sometimes a portion of the pension was premarital.

If, for example, the plan participant worked for 5 years prior to the marriage, the portion earned during those 5 years is premarital. That means it is separate property and not subject to equitable distribution.

However, how do you determine the premarital value of the 5 years of pension? You cannot simply look at its value on the date of the marriage! Stay with me here. Because early contributions accrue interest, that interest is also separate property and needs to be valued.

So if a plan is worth $10,000 at the date of marriage, you can’t simply subtract $10,000 from the total as the nonmarital portion – you must also see what the gains on the $10,000 were for the length of the marriage until the filing of the complaint. How was the $10,000 invested? How did each of those funds perform over the 5 years? This requires analysis! The $10,000 might actually be worth $30,000. This is not visible to the naked eye.

The eye of the actuary, however, is greater than 20/20!

So, to summarize: the pre-marital portion must be qualified, backed out, and then a present value given for the marital portion. Defined benefit plans, usually pensions, are complex assets that typically require the expertise of an actuary to properly value.

What does the actuary do?

An actuary (or other expert such as a forensic accountant) must read the pension statement, annual benefits description, and Summary Plan Description (SPD) to understand the benefits. She will look at dates of birth of both parties, date of marriage, actuarial tables, life expectancy for the beneficiary and the alternate beneficiary. Then, the expert will provide a present value and, if necessary, the marital and non-marital shares of the asset.

In the final Part of this series, we will talk about some popular options that divorcing couples use to divide assets with a theoretical “present value.”

Rachel AlexanderRachel Alexander
Alexander Mediation Group
119 West Valley Brook Rd
Califon, NJ 07830
(908) 832-2305