Finance

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

“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

“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

“Someday” and “Maybe” Numbers: The Challenge of Dividing Retirement Assets – Part 1

“Someday” and “Maybe” Numbers: The Challenge of Dividing Retirement Assets - Part 1 by Rachel Alexander{2:48 minutes to read}

“Hands off,” decries one spouse, “I worked for this, not you. Back off, you lazy sot!”

Retirement Assets

While I loathe being the bearer of what could be received as bad news: assets earned during the marriage are marital property and subject to equitable distribution. This includes assets earned directly from the efforts of just one party. This asset class includes retirement savings plans, 401(k)s, 403(b)s, and pensions (both defined contribution plans, and defined benefit plans). Often, these assets are complex and require professional valuations in order to glean their true, marital value.

One party might say: “Sure, I have a pension. It says I’ll get $1,800 every month, when I’m 62! I’m only 45 now, and can’t touch anything. Plus, what if I don’t retire? What if I lose my job or get laid off or worse? I might get nothing. How can I give you part of something I may never receive?”

This is true, however, we must widen our lens to take in the whole picture and the concept of…

Present Value

Participants usually receive pension statements that state projected monthly payments as of a certain age of retirement. In order to equitably distribute marital assets, we must calculate their “present value.” Present value means an asset’s current worth; that is, what it would have to equal today (e.g. $470,000) in order for it to produce a particular projected monthly amount (e.g. $1,800) down the road, say, in 17 years. The $470,000, not the $1,800 per month, is the amount we have to divide in a divorce.

Confusing? Yes. Particularly because we are no longer working with real numbers. We have entered the mysterious, worrisome and sometimes Escherian world of mathematical possibilities. A world of “maybe numbers” assembled from actuarial charts of life expectancy and statistical probability. To make sense of this world, we need the expertise of an actuary.

What are the actual values? What about the portion earned before the marriage or after we filed for divorce? And how do we divide these assets?

Excellent questions!! Stay tuned for Part 2!

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

It Takes 2, Baby!? Or, What Happens When Only One Person Wants the Divorce?

It Takes 2, Baby!? Or, What Happens When Only One Person Wants the Divorce?

{6:48 minutes to read} In New Jersey, divorce requires only one willing party. So what about the other party? The one who doesn’t want the divorce? And how can this work in mediation?

Mediation is sometimes believed to be an alternative only when both parties want divorce. I would suggest that mediation is still the best alternative, even for the party who doesn’t want to end the marriage.

Because a divorce will occur, with or without the consent of the non-moving party, the question becomes not whether there will be a divorce but how it will be reached. Mediation is always the better process, but perhaps even more so for the one who hasn’t had the opportunity to initiate the divorce.

In this situation, mediation has the potential for sensitivity to such issues as:

  • How can a reluctant participant be helped to face the inevitable and unwanted change?
  • How can the situation be normalized, understood and processed when its very nature is fraught with pitfalls of disempowerment and potential humiliations?

First, parties are helped to appreciate the situation as quite customary. Rarely are two people on the same emotional page at the same time. Usually, divorcing couples are “emotionally staggered,” and often this has more to do with individual thresholds for given situations. Both people are unhappy, but only one person’s unhappiness barometer has exploded.

People divorce because one or both parties are not thriving in the current situation. A therapist friend of mine once said, “If a relationship isn’t working for one person, it’s not working.” That means no matter how much one person wants the relationship, if their partner doesn’t, neither person is in a workable relationship. More about this in a moment.

In Inter-Relational Focusing, one branch of Focusing, it is specified that the intent of any interaction is to improve the lives of its participants. Relationships are to move life forward. They’re not, as commonly believed, to scoop out the other’s proverbial insides like spaghetti squash and ring them out to meet one’s own needs. There is the me, the you, and the what’s between us. Only the last part is the relationship.

By definition, if one party wants to continue the relationship in spite of the knowledge that the other person needs to leave it, she is not behaving congruently with a loving partnership. A loving partnership has room for both people’s needs. It respects the other, even when the other’s wants diverge from one’s own. In a healthy relationship, both participants must be unwilling to compromise the well-being of the other.

But a marriage is not necessarily a relationship, just as a romantic or loving relationship doesn’t necessarily constitute a marriage. It’s often helpful to unpack these things in order to identify what’s actually wanted. Often marriages develop into organizations, with friends and second homes, children and activities, a structure that provides comfort and stability, identity and belonging. These are important to almost everyone, but they can be distinct from the actual relationship between husband and wife.

Modern marriages in this country are no longer arranged, but they often morph into “arrangements.” In divorce mediation, when one spouse doesn’t want the divorce, it’s helpful to know why. Really, why – that is, what they are holding on to, and what they are most afraid to lose. It’s almost never the loving companionship of their spouse.

Sometimes they are wanting some aspect that the marriage provided, but that is not necessarily about the other person. Sometimes the heartbreak one thinks he is experiencing has little to do with the relationship, but more to do with other aspects of married life.

This is important, because what’s really valued and needed can be both addressed in mediation and worked towards after the divorce. The divorce itself, while still unwanted, can be understood as less of a total loss of everything. Much of what feels threatened by the divorce can be supported and maintained.

Some examples from mediation:

  • A parent who equates divorce with “losing his family” is helped to understand that his imagined version is incommensurable with the reality that could have him sharing physical custody equally and spending time with his children virtually daily.
  • A spouse who associates divorce with imminent poverty is helped when she learns that appropriate financial support will afford her a standard of living reasonably comparable to what she currently experiences.

Recently, I asked a client who absolutely did not want his marriage to end, this: “If it wasn’t a marriage, if you were just in a relationship, with no financial implication, would you fight this hard to keep it together?” Without hesitation, almost as if the question was absurd, he cried, “No, absolutely not.” Sometimes the attachment is not to the other but to what has been created during the time spent and in cooperation with the other.

Identifying what is hard to relinquish reveals what is valued and what can be worked with and carried forward into the next chapter of life. Loss is implicit in divorce. In fact, loss is implicit in life. Clarifying what we are actually losing can help us regain a foothold and focus our energies on what we can control and how we intend to shape our lives going forward.

Rachel Alexander

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

How to Save Money and Affirm Life by Mediating Your Divorce

How to Save Money and Affirm Life by Mediating Your Divorce | Rachel Alexander{4:24 minutes to read} No one wants to spend more money than absolutely necessary on their divorce. No one has a divorce account. There is no particular tax benefit or refund for fees spent on divorce.

My clients represent a whole range of economic resources, but no matter what their financial situation, they do not want [or need] to spend money unnecessarily on their divorce. So, I want to invite you, who are thinking about divorce, to give some careful thought to where you want to invest your resources:

Are you willing to set aside $40,000 or $50,000 each to pursue an adversarial process?

If you could finalize your divorce for under $10,000, are there things you would do that could bring delight?

Could that money be used for something restorative or rejuvenating, once the divorce process is complete?

What could be done with an extra $20,000-$40,000 to spend? Pursuing the adversarial process can easily cost that much and more. Instead of wasting money on litigation, how about:

  • Spending a week in Nantucket;
  • Paying off credit-card debt;
  • Paying for summer camp for the next few summers;
  • Plumping up college savings;
  • Taking the kids apple picking this fall and letting them pick too many apples, without protest;
  • Getting a massage once a month;
  • Saying “yes” more often to the children, and yourself, for small indulgences;
  • Eating out one extra night a month;
  • Saving the whales, or helping to anyway;
  • Treating an elderly relative to his plane ticket to visit you;
  • Keeping the domestic help you would otherwise be giving up;
  • Keeping your gym membership;
  • Taking a vacation with friends;
  • Going to that spa or baseball camp or yoga retreat on your wish list;
  • Creating an account for those “incidental” expenses that always arise and cause stress—e.g.travel soccer fees, hotel rooms, uniforms for cheerleading, party dresses, interview clothes, birthday party gifts—and use its existence to reduce your anxiety over money.

The idea is to link up that game of what would you do if you had x amount of found money with saving money in your divorce.

No one (apart from a sadist) would pay $40,000 for a stressful, painful, acrimonious, protracted, loss-of-control, bilious experience. No one would knowingly pay to have pain, drain their family resources—both financially and emotionally—and incur stress and debt that bleeds into every area of life, at least for a time.

Managing the conflict of divorce through mediation substantially reduces angst and cost. Mediation simultaneously increases possibilities for creative resolutions while addressing and managing sources of stress. This is good for the family and good for the pocketbook.

Spending money can be a pleasure, not a trauma. When families spend money wisely—in order to save money—they maintain more control of their lives.

You are invited to start thinking about what money can be happily used for. Having several thousand dollars could really be a pleasure, and could, if it’s used thoughtfully, be life-enhancing. The idea is to use money for life affirming rather than life draining endeavors. Having a bit of extra money post-divorce is antidotal for the money-fear that tends to follow a divorce.

Divorce or no, dream a little bit about what would be happy and fulfilling. Save your money by avoiding an adversarial process. Approach your divorce laparoscopically, where you use funds judiciously to further resolution. Put the savings toward something that brings peace, joy, and, above all, happiness.

Rachel Alexander

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

Alimony Ain’t Easy!

{8:18 minutes to read} AAlimony Ain’t Easy! by Rachel Alexanders a divorce mediator and family law attorney, I am often asked, “What’s the formula to calculate alimony?” In New Jersey, there is none. We do have a new alimony reform law adopted in September 2014, about which there has been (and continues to be) a lot of confusion. This blog post looks at the current factors used to determine alimony.

Continue reading Alimony Ain’t Easy!

A healthy approach to creating a Post-Divorce Budget

Budgeting – the very mention of it – sends many people into something like anaphylactic shock.  They stop breathing, rouge, and stare straight ahead, into the space where the abyss resides. There is something paralyzing, overwhelming and claustrophobic about the notion of being constrained by rules and limitations around spending.  Feelings of deprivation may be aroused.  Fear of lack, loss and the unknown can also be triggered.  

One of the essential parts of divorce is budgeting.  In order to arrive at the terms for settlement, clients must pull together their current marital budget as well as their anticipated post-divorce living expenses.  A post-divorce budget provides important data of how the parties lived together and what will be needed to live separately.

In reviewing the actual definition of the word “budget” I looked at its synonyms. Most of the words that can stand in for budget have to do with cost-cutting and imply less quality, such as cheap, bargain-basement, low-end, inexpensive, dirt cheap, and perhaps best of all, el cheapo. What’s better than dressing up something unwanted in a foreign sounding cloak?

Furthermore, our common associations with the word budget have to do with such concepts like a 50 million dollar film budget or national budget – both of which have an unreal and an obtuse quality for most of us.

It’s no wonder we struggle to warm up to this word with its less-than, negative and vague connotations, particularly when it comes to the anticipation of a divorce budget. So let’s refrain. Because language is important when looking to relate to things we’d rather avoid, we need as much help as possible.  If we introduce the notion of something more appealing, that invites a heightened sense of control and a movement towards what’s wanted, perhaps that would help.  

Instead of budgeting what about estate management or financial governance? Try those on and see how they feel. Try out a few of your own. Situate yourself in a space of what is wanted and how you’d like to shape your relationship with your finances to create a satisfying and long term alliance.

Recently I met with Dan Jago, a financial planner at Main Street Wealth Management in Bedminster/Bernardsville, NJ.  He works primarily with 30 and 40-somethings who are often brand new to financial planning. Dan initiates what is often their first conversation around budgeting, or if you prefer – financial governance – and he speaks to how he approaches it in a fresh and helpful manner which I appreciate. What follows is an outline of how people might begin this conversation (or inner dialogue) around this important topic, particularly regarding a divorce budget. I have integrated Dan’s input with my own.

What’s Happening? (Preparing for a post-divorce budget)

First, from a non-judgmental and non-critical stance, without an obligation to change a thing, take a look at what you are currently doing around money. What are your spending habits? Are you at Starbucks everyday? Do you pay bills online? Use auto-deposit for your paychecks?  Mostly use cash? Rely on one or several credit cards?  With a guide such as Dan, you can evaluate current spending patterns and habits and formulate your post-divorce budget.

Just as you would make someone’s acquaintance with politeness and curiosity, this is how I invite you to approach your current spending. Except in the Wild West of old, we typically don’t meet others with guns blazing, ready for a showdown. Approach you current spending as you would a potential long-term, dear friend. Softly.

What Would You Like To Be Happening?

When it comes to divorce, and establishing your current and post-divorce budget, it is easy to hone in on what’s wrong with what you’re doing, (and by implication, what’s wrong with you).  Focus instead on what you want to create.  

By shifting in this way, you involve a different part of your brain – a visionary part – which has the power to inspire.  Take some time to dream.  Helpful questions might include:  What would it take for you to feel great about money?  To feel secure?  To feel content with your handling of your finances?  What would you like to own, pay off, do, be able to give to your children, family, friends, community, etc.?  What would you like to know for certain?  How will your post-divorce budget be different from your current financial governance when it’s complete?

Once you have tapped into what you’d like, not only can dollars enter the equation, but so can current practices.  Within the benevolent, sunny environment formed by focusing on what’s wanted, we are more equipped to turn to current habits and analyze what can be modified and built in order to bring forward what is desired.  A plan is determined and set in motion.  

Dan and I talked about a few concrete examples.  Take Bob.  Perhaps part of Bob’s plan is to save an additional $100 per month in his post-divorce budget so he can rent a ski house for a week in the winter.  By reviewing Bob’s current habits, Dan and Bob identified that Bob stops in Starbucks every morning on his way to work, spending approximately $25 weekly on coffee concoctions.  Bob enjoys the whole ritual of stopping there – it’s something that get’s him out of bed and on the road.  So rather than asking that Bob forsake Starbucks and his weekday ritual, we might ask if Bob would be willing to switch some of the days out for less elaborate and costly coffee options.  Maybe Mondays are the days when Bob orders his favorite drink.  In consideration of his post-divorce budget and savings goal on Tuesday-Thursday he orders regular coffee, saving close to $15 per week simply by making this cost conscious modification.

This reasonably minor behavioral modification frees $64.50 per month, and gets Bob substantially toward his divorce budget and savings goal.  He needs to find another $35.50 to reach the $100 goal.   

Bob eats all of his lunches in the work cafeteria to build relationships with colleagues and enjoy the camaraderie of his mates.  Although the cafeteria is subsidized, he spends an average of $8 per day on lunch.  By simply carrying a water bottle and filling it at home and from the office water cooler, Bob can cut his weekly beverage costs of $8 per week, reducing his beverage spending by another $34.40, giving him $98.90 in his post-divorce budget (just $1.10 away from his goal).  

What’s important about these modifications is that Bob kept the parts of his habits that served him and that he enjoyed and counted on.  The changes he made didn’t change the substantive nature of his habits and supported all the structural and social benefits he currently enjoys within his post-divorce budget.  

Bob wasn’t told to give up Starbucks or start eating at his desk.  Such draconian measures were unnecessary to accomplish his goal.  They would have felt more punishing than progressive.  Once this is set in place, Bob arranges to have the additional $100 transferred directly from his automatic deposit into his savings or investment account.  He doesn’t need to worry about it again, and his post-divorce budget supports his new goal.  Now when Bob sips from his water bottle, he sometimes has an additional sense of pride and security that his daily actions are providing for his future.  

Control – A Different Approach

By setting goals with a financial advisor for your post-divorce budget, and then refining your day-to-day habits to further those goals, you gain a sense of power over your current finances and future financial life.

When a financial planner focuses on budgeting, you are a participant, not a passive member in the process.  In my experience, many financial professionals do not spend enough time working with clients’ spending habits, as they are focused on investment strategy rather than creating a necessary budget or post-divorce budget.  Much about investing is confusing and overwhelming, particularly for people new to finance, and that can cause the relinquishing of control in favor of sheer hope that the person we’ve selected to manage our money is competent, at least.  This has the same feel of riding a rollercoaster, eyes closed, praying the operator is sober and awake.  No wonder we have anxiety around money and investing, and doubly so when the complexities of divorce are added to the mix!  Developing an understanding of investing and the market is a significant undertaking, and not the easiest jumping off point for many of us.

Conversely, making a budget is a more straight-forward and plausible entry point in working with a professional.  By entering a discovery phase of evaluating your current practices, you ally with your financial professional.  Through actively aligning your daily life with your financial goals, you partner with your planner.  

Once you begin to turn towards your finances, even in a small way, you will set in motion something with wings.  This something, as you attend to it, will grow stronger and larger and ultimately take flight.

This blog was written with thanks to Dan J. Jago, AIF®, whose ideas and input were incorporated throughout.  Dan can be reached at DJago@MSWealth.com or (908) 719-8700.  His website is www.MSWealth.com.

 

Reentering The Workforce – Part 2

Reentering-the-workforce-pt-2-dplic-300x300In the last blog, we looked at re-entering the workforce with a focus on work being an articulation of Self. If we expand this view to include not only what one wants to contribute or feels called upon to express, but what one wants to experience and enjoy, we broaden our notion of what work can help us access.

That is, getting a job because you need to go back to work now, is hardly incentivizing. It can be helpful to focus on what the end goals of working are.

Goals may include:

  • Freedom – I want to expand my universe and have options that would be unavailable to me if I remain working within the home or financially dependent on another.
  • Social Opportunities  – I’d love to meet others engaged in productive endeavors.
  • Growth -Introducing experiences and exploring new environments could provide the opportunity to learn more about others and also oneself – observing how one resonates or rejects different stimuli can be expansive and introspective at once.
  • Financial Enrichment -I want to be able to put aside $4,000, because I really want to take that trip I’ve been thinking about. More specifically, working out a budget based on what is desired(rather than solely on what is needed) can be useful in focusing on what kind of income and thus job is needed, and what may be helpful on a temporary basis.

God is in the details.*

The power of a clearly defined aim is paramount. If I know I need $1500 within six weeks in order to pay my share of a beach house rental at the shore in August, I may be willing to consider multiple opportunities to earn this amount, including things I would never envision myself doing for an extended period (perhaps babysitting, dog walking, filling in for someone at the farmer’s market, etc.)

Without a clear incentive, I may scoff at the very notion of doing these tasks and inadvertently imagine that if I engage in such employment I have automatically become a professional dog walker, babysitter or farmer’s market clerk. Over-identifying with employment can be avoided by creating goals that are more important than the tasks required to reach them.

I have a dear friend who has been grappling with being unemployed since October. He is so entrenched in the analysis of the meaning of the work he chooses to do at this stage of his life and how that reflects on him, that he has done virtually nothing to secure any temporary work whatsoever.

It would be considerably liberating if he would:

  1. Distinguish between his value and his work.
  2. Embrace the notion that he can take a particular job without adopting it as his identity, or committing to performing it for the remainder of his life

He need not complete his analysis regarding the perfect employment before taking some helpful action. For example, taking a temporary job to generate a bit of income may improve the situation without fully resolving it. In fact, taking any position, however imperfect, may provide important data and avail him of opportunities inaccessible if he resides solely in his own head!

I suggest that a less paralyzing approach can be this: designing your goals first, and then implementing employment as a means of accomplishing those goals. In this way, work of any and every kind can serve in furtherance and support of your well-being and the creation of the life you desire.

*Attributed to either architect Ludwig Mies van der Rohe (1886-1969), art historian Aby Warburg (1866-1929), or author Gustave Flaubert (1821-1880).

Reentering The Workforce

Reentering-the-Workforce-DPLIC-300x221Divorce is such a troublemaker because it brings up so many troublesome life issues. One of them is work. Work carries with it meaning replete with status, value, identity, maturity, self-reliance, our relationship to the outside world and how others relate to us.

Amidst the other complex issues surrounding divorce, re-evaluating one’s work-life may present yet another challenge that was not asked for. What’s more, financial pressure usually dictates these next steps rather than pure desire or curiosity. What under normal circumstances may feel stressful, can now feel terrifying.

But it is not just about getting a job. It’s about posing a lot of profound questions like:

  1. Who am I?
  2. What do I want to do?
  3. Can I take care of myself?

Prior to attending law school, I went to career services at my undergraduate college to research whether I was a good candidate for law school and the legal profession. At that point I was envisioning a career like a jello mold one pours oneself into in order to take on a specific shape.

The woman at career services administered a test to evaluate suitability in this field. What was more influential than the actual test results was the discussion I had with her afterwards. The advice she rendered shifted my paradigm about careers forever. She said it is not about fitting yourself into a career, it is about your voice and what education and experiences you need in order to fully express it. This inverted my understanding of where I needed to be looking for information regarding what I needed to do.

I began to consider the effect I wanted to have with my life, and began viewing work as one of the vehicles for accomplishing this. Rather than defining myself by identifying with a particular career, my task wasfirst to define myself and then make employment and educational choices aligned with that.

What in you calls for expression? Even asking that question is self-honoring, placing you in command of your future. What flows from this inquiry will supply a direction that can be operationalized into next steps, whether that is returning to obtain a degree, taking a part-time position to build experience, or going to the library to do research. As your vision takes shape, be prepared to modify your course and refine earlier choices – this is part of designing your work life so it continues to reflect your expression and intended contribution.  While this may be no small task, I submit that this is the right task.

Evaluating one’s work identity at a later stage in life is challenging.  It may be normalizing to be reminded that many of us, for a variety of reasons, particularly in today’s volatile economic environment, are in the same boat – beginning new careers, investing in self-inquiry.

Approaching work in a more personal way can restore a much needed internal nucleus of control.

So what if you aren’t terribly career minded? How do you approach reentering the job market then? More about that in an upcoming blog.

If Divorce Is In The Future, What Documents Do You Need And Why?

ClaudiaMulti colored File Folders Mott is a Certified Financial Planner® with a specialty in divorce. We have invited her to act as a contributing blogger to our post. In her first guest blog she addresses which financial documents are needed when preparing to go through a divorce, and why.

If Divorce is in the Future, What Documents Do You Need and Why?
By Claudia Mott

Child support, alimony, equitable distribution; these are a few of the key financial issues addressed in many divorce cases. But underlying all of these topics is the need for accurate and comprehensive information about the family’s financial life. A couple is encouraged to create a detailed summary of their joint lifestyle, as well as budgets for each party post-divorce. The starting points? A balance sheet listing all of their assets and liabilities and a detailed living expense summary. Determine what statements will be needed by creating an inventory list for the items on the balance sheet.

Assets include:

  • Value of the home (provided there is equity)
  • Bank, investment and retirement accounts
  • Personal property such as automobiles
  • Art or other collectibles
  • Cash value of life insurance

Liabilities include outstanding balances on:

  • Mortgages
  • Credit cards
  • All forms of loans (student, auto, personal)

The most recent statements for all of these items should be used to obtain a current value, but more updated copies may be necessary once a final valuation date is determined.

The living expense summary should be created to reflect the family’s lifestyle for one year. The Case Information Statement (CIS) located on the njcourts.gov website includes a comprehensive breakdown of costs for housing, transportation, medical and personal expenses. One year’s statements from banks, credit cards and loans are required to do an accurate and thorough computation of a family’s lifestyle. Downloading statements and aggregating them in a spreadsheet or software package like Quicken can make creating the living expense summary easier. There are also online tools such as Mint.com which categorize and summarize spending as well.

Also important to collect: Information on the family’s different sources of income. In addition to previous tax returns, pay stubs and W-2s, it may be necessary to provide documents detailing rental income, outside business interests, K-1s and unearned income from investments.

A copy of each spouse’s credit report is essential to ensure that statements for all open accounts have been provided. A credit report provides a listing of all bank, loan and credit card accounts regardless of whether they are held individually or jointly.

Setting up a simple filing system using an accordion file or colored file folders can make the process of managing all of these statements and documents much easier.

Divorce is an emotional process. By taking the time to organize your documents and create an accurate picture of your family’s financial life, it will be easier to make important financial decisions with confidence, and avoid costly mistakes.
Screen-Shot-2014-01-03-at-7.25.32-AMClaudia E. Mott, CFP®, CDFA™
Certified Financial Planner®
Certified Divorce Financial Analyst
Click here to read Claudia Mott’s Bio
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