Jennifer McCaskill
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Red Bank New Jersey Family Law Blog

The retirement implications of upcoming alimony changes

Most New Jersey residents are aware that 2019 will bring new changes in the way that spousal support is handled during a divorce. Once this year comes to a close, the party tasked with making alimony payments will no longer be able to claim those expenses as deductions on his or her tax return. The party receiving those payments will no longer have to claim them as income. However, these changes are prospective only and do not affect divorces that have already be finalized.

That might seem like a good deal for the recipient, but that's not always the case. Consider, for example, a spouse who is nearing retirement age but hasn't been in the workforce for many years, having chosen to manage the household and raise the kids during the marriage. Even if that spouse gets a decent alimony settlement, he or she cannot use those funds to contribute to retirement savings like an IRA or Roth account. 

Helpful ways to tell children about a divorce

When parents decide it is time to divorce, one central worry is about the wellbeing and happiness of the children from the marriage. Breaking the news of a divorce can feel like a daunting or even insurmountable challenge for parents in New Jersey. It’s important to find a compassionate yet straightforward strategy to have this conversation with the children.

As you prepare to tell children about an upcoming divorce, consider some tips to do so in an effective yet gentle manner. Children need to be a top priority as parents navigate a separation and divorce. Here are some general reminders for parents as you begin to plan how you will break the news of a divorce to the children.

Why would a new credit card play a role in alimony planning?

Charting out one's anticipated income and expenses is a critical part of a New Jersey divorce. For spouses who expect to receive alimony or child support, it's critical to understand that those payments might not begin coming in as quickly as anticipated. In fact, it's not uncommon for the paying spouse to balk at making those payments, especially in the weeks and months after a filing. Having a plan in place can make it easier to cover living expenses during this period of time. 

A new credit card can act as a type of financial security blanket as a spouse prepares to file for divorce. Having a line of credit available ensures that it will be possible to pay for deposits on new living arrangements, cover initial legal expenses, and generally just cover one's need in the weeks and months after filing for divorce. It can also help spouses feel more secure as they move forward into a process filled with uncertainties. 

Alimony might not be the best focus in late life divorce

As they near the end of a lengthy marriage, many New Jersey residents focus on negotiating spousal support. While alimony may be an important part of addressing financial needs after a divorce, older spouses may want to think about other options when it comes to working out the financial details. That's because alimony is only a viable option while the paying spouse is still alive, while certain other assets could continue to bring in income regardless of the lifespan of one's soon-to-be ex. 

In many cases, assets like retirement savings, real estate and investments could have more value than alimony payments. Accepting a greater share of those assets at the time of divorce provides a more certain outcome. The recipient can determine how best to use those assets to meet his or her needs. 

Adhere to prenup to simplify a high asset divorce

Many New Jersey residents consider prenuptial agreements to be static, one-time documents that are drafted, signed and subsequently stored away, hopefully never to be needed. In reality, the decisions a spouse makes throughout his or her marriage can have a huge impact on whether a prenup can be called into action in the event of a high asset divorce. If the wrong choices are made, the document may be at risk of being thrown out of court. 

When a prenuptial agreement is initially drafted, both parties make a full disclosure of all of their assets and debt. They also agree on terms regarding how assets would be divided in the event of a divorce. If those spouses go on to make choices that fly in the face of those agreements, however, a court could rule that the initial provisions are no longer valid. 

Student loans can increase the cost of same-sex divorce

Lots of New Jersey residents have student loan debt, and many struggle to get those loans paid off. For some same-sex couples, student loan debt can even factor into divorce timing and expense. Understanding how to avoid that outcome is an important part of moving beyond a same-sex divorce and toward a happier, more financially stable future. 

According to a recent survey, couples with student loan debt spent more on their divorce than those without the same financial burdens. In fact, 13 percent of survey participants even went so far as to blame their student loan debt for the demise of their marriage. On average, divorces that included student loans cost around $2,000 more than those where student loans were not present. 

Try to avoid these common alimony mistakes

Negotiating spousal support is never a simple or easy process, but many breadwinners make very common mistakes that can harm their interests in the long run. Knowing what those mistakes are can help men and women avoid choosing the same path and experiencing the same outcome. New Jersey spouses should take the time to think about the long-term ramifications of making hasty or ill-advised alimony decisions

One common mistake involves focusing more on getting things over with than the ultimate bottom line. Many spouses who know they are going to have to pay spousal support want to handle those payments in one lump sum, or in a series of larger payments over a short period of time. That is often a mistake, as most alimony agreements state that payments end when the receiving party remarries or begins cohabitating. 

Frozen embryos, same-sex couples and divorce

For same-sex couples in New Jersey, numerous legal issues can prove complicated. One example is instances in which couples create frozen embryos and then part ways before they bring a child into the world. What is done with that genetic material can be a serious legal issue, one that can drag on for years as parties argue over the fate of those embryos. This can become a serious legal matter in regard to same-sex couples and divorce.

One state is taking a bold approach to the topic through a new law that grants preference to a party who wants to use frozen embryos to bring a child into the world. Previously, most courts ruled in favor of the dissenting voice when it comes to this topic. Few judges want to force parenthood onto an unwilling party. However, there are cases that come before a court that present compelling arguments. 

High asset divorce can bring multiple surprises

For those in New Jersey who are preparing to divorce, it's important to know that the process may bring some unexpected twists and turns. Financial surprises are not uncommon in a high asset divorce, and can bring a great deal of turmoil to an already challenging process. The best way to avoid these disruption is to delve into the marital finances as early in the process as possible, preferably before filing. 

One of the most common financial surprises in any divorce occurs when one spouse is not aware of the full scope of debt that the couple holds. This usually happens when one party allows the other to handle the bulk of financial matters during the marriage. When the time comes for divorce, marital wealth may not be what a spouse assumed it was. 

What to consider when contemplating mediation

While going through a divorce, you and your spouse will have to negotiate. There are different ways you can go about a divorce and many couples are now choosing mediation as that option. Mediation is a method of alternative dispute resolution that is available during a divorce. This process involves a third party to facilitate negotiations in terms of the divorce.

Understanding how mediation works is an important step to deciding if it is for you. This is a quicker and less expensive option for couples going through a divorce. It is also an option that provides privacy during the divorce process. You can avoid facing a judge and you and your spouse can make a settlement in a confidential setting.

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