Uncategorized Archives | Collaborative Law Institute

August 22, 2020April 5, 2023

Divorce is never an easy topic, nor should it be an easy answer – but what about during a pandemic? Is disrupting your family’s life to separate into two households the right thing to do when a pandemic is taking place?

There is never going to be a “right” time to divorce. Once a couple figures out either on their own or through counseling[1] that their problems cannot be solved, a constructive divorce is often the next step.

Courts are open and those cases that can be resolved without any court hearings are moving more rapidly than ever through the now virtual court system. The collaborative divorce model has been around for awhile, but using it now during the pandemic can make your divorce more efficient, while still bringing in the professionals as needed for your particular situation, including financial planners, mortgage brokers, child specialists, divorce coaches or mediators.

Collaborative may be the right process for you if you want the following:

To stay out of court,
To work things out on your own,
To make a plan for the future for both parties looking at your family’s interests and needs,
To maintain a private, safe environment to exchange ideas and options,
To put your family first.

Collaborative Divorce is not going to be about winning, revenge or punishment. Rather the collaborative process requires both attorneys and parties to focus on interests and goals instead of positions through a series of joint meetings. Traditionally these meetings were held in person, but the same meetings can now take place virtually and everything can be handled online. Starting the process now may be just as good as any other time.

You can find more detailed information about collaborative practice and look for professionals to help get you started at the Collaborative Law Institute of Minnesota.

[1] Discernment Counseling is a type of limited scope counseling that helps couples or individuals determine whether to work on their marriage or keep moving towards divorce. See University of Minnesota Couples on the Brink project.

Author: Angela Heart, Heart Law, LLC

Angela is a collaborative family law attorney at Heart Law, LLC. Her mission is to enable and empower divorcing couples to have a smooth transition that is family focused during a life changing event. To find more information about Heart Law go to www.heartlaw.net.

April 2, 2019

It’s important for divorcees to review and adjust their W-4 payroll withholding or start to make quarterly tax estimates following their divorce. Often, they are so relieved to have reached settlement, they fail to think about these housekeeping items. If divorced in 2018, this is especially important if transferring taxable spousal maintenance. The payor spouse can likely change their payroll withholding to increase their net income. The payee spouse will need to withhold additional tax dollars on their salary or make quarterly estimated tax payments, to account for taxes on the spousal maintenance payments received. If the payor spouse doesn’t adjust their W-4, they may not be able to meet their budget during the year and would probably receive a large tax refund when taxes are filed. If the payee spouse doesn’t adjust their W-4 or start quarterly estimated taxes, they could have a large tax liability when they file their return. Even if there isn’t taxable spousal maintenance, individuals still may need to adjust their withholding. Things that can impact taxes and often require an adjustment are a change in their filing status, pre- tax payroll deductions (retirement contributions, health savings account, health insurance premiums), and itemized deductions such as real estate taxes and mortgage interest. Making these adjustments now will help cash flow match what was projected during the divorce process and save the headache later of a tax surprise.

February 10, 2019

Wouldn’t it be great if families could complete their divorce in a conference room rather than a courtroom? That’s the thinking behind the Collaborative Process and what makes the Collaborative Law Institute of Minnesota so helpful to divorce professionals and divorcing families. Because of TV shows and just our general culture of “fighting” for our rights, we often think that we have to spend endless amounts of money and fight in court to get a divorce, but that simply isn’t true. In the Collaborative Process, we help families reach agreements without ever setting foot in a courtroom. The Collaborative Law Institute of Minnesota (CLI) trains professionals in areas of law, finances, relationships and mental health to work with families outside of court to reach durable and understandable divorce agreements that work for their families. Law school is focused on training attorneys for inside the courtroom. That’s why we need CLI to train attorneys and other divorce professionals to help clients outside the courtroom. This is a major paradigm shift for the legal profession, but it shouldn’t be so surprising that this is the help and advice that families need and want. Because, let’s be honest, who really wants to go to court?

February 3, 2019

It is important to review and discuss tax planning for the year in which a divorce was completed, especially for high earning individuals who receive incentive compensation and plan to be divorced by December 31, 2018. As part of the 2017 Tax Cuts and Jobs Act, many tax law changes became effective in 2018. One change was to the flat tax rate that is withheld by companies on incentive income such as bonus income, commission income, exercised stock options, and vested restricted stock. As of January 2018, the federal rate changed from 25% to 22%. The Minnesota state rate remains the same at 6.25%. Most highly compensated individuals have marginal tax rates above 22%, so tax on the above income types is under-withheld. To avoid an unpleasant tax surprise come April 15^th, be sure to address this potential additional tax liability and come up with a plan to handle it. Some options to consider are:

Estimate the tax liability now and include and allocate it as part of the property division.
Include language to share in the tax liability when return(s) are filed next year.
Consider whether it makes sense to load-up itemized deductions from the year to the higher earning spouse to help offset liability (i.e. real estate taxes, mortgage interest, charitable contributions).

January 27, 2019

One of the reasons that divorce is such a challenging life transition is its public nature. A couple might keep their problems private as they try to work through them. But if a rift opens that can’t be mended, the couple will have to share some very difficult news with friends and family as they separate from one another. Few of us will have to reveal emotional personal issues to as wide an audience as Jeff and MacKenzie Bezos recently did. The statement that Jeff released on Twitter suggests that he and MacKenzie are trying to make their split as amicable as possible by usin three insightful ideas that could help anyone struggling through a divorce.

Be open and honest with those closest to you.

“We want to make people aware of a development in our lives. As our family and close friends know, after a long period of loving exploration and trial separation, we have decided to divorce and continue our shared lives as friends.” Couples need privacy as they deal with strains on their marriage. But once a decision is made, clear communication with your family, friends, and each other will be very important. That goes double if any young children are in the picture. The more open a couple is about what’s happening, the easier it will be for you to find the outside support that will help you through this transition. Good dialogue might also help you and your former spouse to focus on the essential tasks at hand, like dividing your assets and updating your essential estate planning documents.

Be grateful.

“We feel incredibly lucky to have found each other and deeply grateful for every one of the years we have been married to each other. If we had known we would separate after 25 years, we would do it all again.” Shame, embarrassment, and guilt are common feelings associated with divorce. Playing the blame game or trying to “win” the divorce can quickly turn all those amicable best intentions into bitter personal and legal issues. Instead, the Bezos statement is a reminder that the end of a marriage – especially a long one – doesn’t erase all of the positive things that came before it. If an amicable divorce is possible in your particular situation, then don’t be ashamed or embarrassed. Cherish those precious shared experiences, like the birth of children, happy vacation memories, the difficult times you helped each other through. Embracing these feelings of gratitude will help ease both you and your partner through this process.

Focus on the positives ahead.

“We’ve had such a great life together as a married couple, and we also see wonderful futures ahead, as parents, friends, partners and ventures and projects, and as individuals pursuing ventures and adventures.” When we work through the $Lifeline exercise, we emphasis that important transitions like retirement, children graduating, weddings, and yes, divorces, are ends in one respect, but also new beginnings. They’re the start of new chapters in your life. That might be difficult to see when the pain of a divorce is still raw. But it’s important to open yourself up to new opportunities when they present themselves. You’re about to start your single life all over again. And yes, it’s scary. It may not be what you wanted. And you may be bitter. But over time, you may be able to see what awaits you on the other end. It could be traveling that you’ve longed for. Maybe you’ll relocate, start a new career, begin new hobbies, and meet new people. You might have more financial resources at your disposal to explore solo than you did when you were younger and unmarried. And you might approach these experiences with a more mature and grateful perspective, enjoying every minute just a little bit more fully. We want to help you through all of life’s major transitions, the positives as well as the challenges. If there’s change on the horizon, make an appointment to come in and review the $Lifeline exercise with us. We can help you plan ahead so that the next chapter of your life is the most fulfilling yet.

January 20, 2019

When a joint investment account is divided, the financial institute will use only one Social Security number to report the earnings and thus only one 1099 will be issued for that account. For example, following their divorce, Dick and Jane divided their joint investment account and transferred their own share into an individual investment account solely in their own name, on November 1^st. If the “primary” Social Security number on the joint account is Dick’s, he will receive one 1099 for the joint account earnings earned from January 1^st– October 31^st and a second 1099 for the individual account earnings earned on his individual account from November 1^st – December 31^st. And, Jane will receive only one 1099 for the individual account earnings earned on her individual account from November 1^st – December 31^st. If the goal is to share the tax liability for the joint investment account earnings, this can be accomplished in a few ways.

The tax liability is projected during the divorce process and an adjustment is worked into the property division.
The spouse who received the 1099 adds the investment income to their tax return and language is added to the decree outlining the agreement on how to share the tax liability at tax filing time.
The spouse who received the 1099 can “nominee”the correct portion of investment income to the other spouse by filing a 1099 and 1096 with the IRS and furnishing a 1099 to the other spouse.

August 18, 2018

If you want a respectful, affordable and uncontested divorce without breaking the bank, you’ll want to consider a Collaborative Divorce.

Do you have a reasonable level of trust and ability to work together with your spous if you have the help of professionals? Does your family makes $60,000 or less per year? If so, then you should apply for the Sliding Scale Fee Program of the Collaborative Law Institute of Minnesota. One of the most frustrating topics when thinking about divorce is “How much will this cost?” Thankfully, when you come to agreements in our Sliding Scale Fee Collaborative Divorce program you will almost certainly pay a fraction of what you would pay with any other professionals charging full price for their divorce services. Collaborative Divorce saves you money. How is that? First, we apply best practices to help you make the most of the time each professional spends working on your case. We think of this as using the right tool for each step of your divorce. Each of you will have your own attorney for legal adivce and advocacy, but you will do most of your work with specialized mediators to make efficient progress. This makes the process less polarizing and more focused on finding win-win solutions that meet both spouse’s needs as best as possible under the circumstances. Since our professionals don’t have to worry about fighting in court on your case, they can focus on helping you find the best solutions. They don’t waste time drafting time-consuming, hurtful and wasteful affidavits and other documents for contested court hearings for clients who are fighting. Second, in the Collaborative Divorce Sliding Scale Fee Program each professional works at a significantly reduced hourly rate. If your family makes $60,000 or less per year, then our Sliding Fee Scale provides that each professional will help you at a significantly reduced hourly rate (often a fraction of their normal hourly rates). For example, outside of the Sliding Scale Fee program, an attorney in the Minneapolis area will typically charge around $250-$350 per hour. In our program, the highest hourly rate is only $60 per hour. Our attorneys and mediators do not go to court in this program. They are here to help you get everything done in your divorce without setting foot in a courtroom. That frees them up to provide an exceptional Collaborative Divorce process to clients. There isn’t any other program like this in Minnesota. What makes this program different? There are only a few sliding scale fee attorney programs and they only provide one attorney on a sliding scale fee. There are no other programs that provide each spouse with a sliding scale fee attorney and specialized mediators to work with the couple on financial and parenting schedule issues, all in one package. In summary, this Sliding Scale Fee program provides a team of professionals so that we can apply the right professional for each step in the uncontested divorce process. Who is this program designed for? We can help couples who have income within our sliding fee scale and who are willing to pay a reduced hourly rate. This is not a pro bono program with free attorneys. It is significantly less expensive but it is not free. Also, you will need to be willing and able to communicate with your spouse and work together with mediators to resolve your financial and parenting time issues in your divorce, with the help of your own attorneys who will be assigned as part of this program. Who will you be working with? You will be working with attorneys, mediators and other professionals who are members of the Collaborative Law Institute of Minnesota who volunteer to take part in this program and accept a lower hourly rate for these cases. What’s the first step? What should I do next? The first step is for one spouse to submit a Sliding Scale Fees Intake Form (found on the Sliding Scale Fee page of our website). Then the Sliding Scale Fee Committee will reach out to you within a few days to help decide if your case is a good fit for the program and what you can do next to move the process forward.

June 30, 2018

Understanding the difference between interests and positions could make all of the difference in helping you negotiate a better outcome in your divorce. Position-Based Bargaining: Most people have a tendency to negotiate by arguing in favor of their positions. In divorce, this type of “position-based” bargaining can actually make it more difficult to get what you want. Once you and your spouse become locked into positions, the need to defend those positions can lead to a lengthy and expensive divorce. Often position based negotiations come to an end only after both parties have reached a point of physical and emotional exhaustion only to reach a “meet in the middle” agreement. One of the many problems with meeting in “the middle” is that the best solutions may have existed outside of either position. Creative negotiation that avoid positions and focus on interests can lead to outcomes that are better for both parties. Interest-Based Bargaining: In divorce, couples start by determining their interests and look for true “win/win” scenarios. In order to appreciate how interest-based bargaining works, it is important to understand the difference between positions and interests. Positions are narrow; “win/lose” proposals can only be satisfied in one way. For example, statements such as “I want Sole custody” or “I need $5,000 per month in support” or “I must have the house” represent positions that require the other person to “lose” in order for you to win. On the other hand, “interests” (sometimes called goals) focus on big picture desires that can be satisfied in many ways. Statements such as “I want our children to be kept out of the conflict” or “I want financial stability for both homes” or “I want us to be able to communicate better in our co-parenting” are requests to have an important interest met. One of the advantages of focusing on big-picture interests is that you and your spouse are likely to have many of these interests in common. Therefore, although working on the details of how these interests can be met will still require some problem solving skills (and some bargaining) the negotiation becomes easier because you are both working toward these important common goals. Interest-based bargaining is a skill that needs to be developed over time. Divorce negotiations are usually improved when the professionals involved have significant training and experience in this method so that they can teach these skills to their clients. Most mediators and Collaborative professionals have training and experience in interest based bargaining. To locate a professional who understands this method to interview and to learn more about interest based divorce negotiation go to www.collaborativelaw.org or www.divorcechoice.com.

June 15, 2018

Have you ever wondered about how to do something that felt daunting but maybe not super complicated (baking a perfect soufflé, building a patio, learning to golf) and decided to follow the advice to “Just look on YouTube!” So you find several videos on YouTube, select the one in your language, and set off to do this thing on your own. How difficult could it be? The Catch: It’s generally harder than it looks on YouTube Those demonstrations are done by people with lots of experience and expertise, who make it seem effortless. And this will be the first time you’re doing this. Perhaps all will go well, but if it does not, your understandable reactions could include: “Why didn’t anybody tell me soufflés need different baking times and temperatures at different altitudes! How many times will I have to experiment to get this right?” “What am I supposed to do now? I hit a big tree root while digging the patio foundation?” “Golf has a lot of moving parts! I really do need lessons.” Because we don’t know what we don’t know, getting the right kind of specialized or expert help at the beginning of a project can be very valuable, can save time and expense and will help prevent frustration and anxiety. What Does this Have to do with Divorce? When ending a marriage, many couples hope to minimize conflict, expense and time by choosing an uncontested divorce process. These range from DIY divorces using down-loadable forms to hiring professionals who do alternative or out-of-court dispute resolution. I am one of those professionals, a neutral child specialist who assists parents and children in a variety of ways during the transition from marriage to getting unmarried. Though I can work with any process, I often work on Collaborative Practice teams offering respectful, out of court, problem solving support for the legal, financial, relationship and parenting issues that are part of a divorce. Those of us doing this work know that there can be complications, unexpected issues, lots of moving parts, and pieces of information not necessarily available to the general public about how laws work. We especially like to help families at the beginning, to set people up for success. I know there are many couples who do not need or want professional services to have a respectful and equitable divorce, and I wish them all the best! But if it becomes more complicated than it appeared on YouTube, please do not hesitate to call.

June 1, 2018

Your divorce is over. It’s time to start sorting through all the things you need to do, to get your financial life in order. Here are just a few tips to help you thrive financially, as you move into this phase of your life. Pay Off Credit Card Debt One of the most important steps to achieve your financial goals is eliminating credit card debt. Start by paying off the balance of one credit card at a time, by either:

Paying off the highest interest rate credit card first, or
Paying off the smallest balance first, then applying that payment amount to the next smallest balance

And, always pay more than the minimum. Build an Emergency Fund Life has a way of throwing financial curve balls. To pay for these unexpected expenses, it’s important to have an emergency fund. A good rule of thumb is to set aside at least 3 to 6 months of expenses in a savings account earmarked for emergencies. This will keep the money “out of site, out of mind” and help reduce your stress level when financial emergencies pop up. Know Your Credit Score Despite its importance, many people don’t know their credit score. Credit scores assist lenders in determining the interest rate you’ll be charged, so you’ll want to know yours and work on improving it. To get your free credit report, visit www.annualcreditreport.com. Reviewing your credit report may also help you catch signs of identity theft early. Start Saving for Retirement We’ve all heard it before, but it truly is essential to start saving for retirement as early as possible. This is because you want to take advantage of compounding – generating growth not only on the original investment, but also on the return you’ve already earned on the investment over time. Compounding allows the potential for your initial investment to grow exponentially. Also, make sure you contribute at least enough to your company retirement plan to get our employer’s match. Don’t pass up free money! Create a Budget Although it’s not always fun, following a budget ensures you will have enough money for the things most important to you. A budget helps you find money to fuel your dreams. Refer to the attached Create Cash Flow* to help you put your budget together. One of the most important things to remember is to pay yourself first! Always set aside money for your emergency fund and retirement before any discretionary expenses. * a chapter from my book Ultimate Women’s Financial Guide to Thrive after Divorce All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.