THE ABILITY TO PROVIDE for your children after a divorce is an issue that weighs heavily during your divorce case. At Ferraro Law Group we have helped thousands of people get to the other side of divorce in a way that is workable; putting plans in place that make sense. We take very seriously the comfort and well-being of your children, and work tirelessly to make sure their lives remain as normal as possible. Here are three tools to help you ensure your financial stability after divorce with minor children.
- Child Support – Every case with children must involve a child support calculation. The more information available, the better off you and your children will be as you navigate your rights and responsibilities after divorce. Child support is determined with a formula which includes consideration of each parent’s income, the number of children, the number of overnights each child spends with each parent, costs of health insurance for the children and each of the parents and cost of any aftercare. Additionally, determining who will claim the child or children and on what years will also give a complete and accurate child support calculation. The better equipped you are with the costs of daycare, summer camp, and health insurance, and the more information you can obtain about the other parent’s financial situation, the better off you will be in planning for the future. Child support is based on a formula and it is very difficult to deviate down from that formula. Often, parents try to agree on a child support amount just like they agreed on a parenting plan for how many nights the child spends with each parent. However, the parties cannot really contract or agree for a child support amount that is less than the guidelines. A judge would have to issue a written ruling every time he or she deviates by more than 5% from the guideline amount and an appellate court will look to see if that deviation was an abuse of discretion. Allowing the parents to agree on an amount below the guideline is an abuse of discretion as the intent is that the child support is for the child. That said, a parent can agree to pay more than the child support guideline calls for, and if he or she does so, they will be held to that amount until their income changes substantially and permanently (which usually means by more than 15% for around a year or more). Keep in mind that child support is a moving target and can change with moderate changes in either parent’s income or in daycare or insurance. If the guideline amount changes by more than $50, that would be a reason to go back to court to have the judgment amended. As such, parents could see themselves in court frequently if these types of changes are frequent and in some circumstances, the parties might agree to pay percentages of daycare or health insurance directly to the providers outside the child support calculation so that if the amounts change, they child support doesn’t. This is different than the timesharing arrangement and number of overnights the children spend with each parent which is substantially more difficult to change absent agreement.
- Rehabilitative Alimony – Often, one parent stays home to raise children while the other parent remains in the workforce to provide for the family’s financial well being. After divorce, this arrangement may no longer be tenable. Still, if one parent needs additional training and support to re-enter the workforce, and the other has the ability to pay, the Court may award rehabilitative alimony. This type of alimony is for a specific duration of time until a specific goal has been reached. For example, if the parent has been out of the workforce and is in need of an updated licensing requirement or additional education or training, the other may be ordered to pay for that licensing, education or training with the idea that the improved position in the workforce will increase the standard of living for both the parent and the child and reduce the need for more support for a longer period of time. This type of alimony is more likely as the length of the marriage increases and/or the parent’s employment opportunities become limited due to their exit from the workforce.
- QDRO (Retirement) – Often one party who has not been in the workforce is worried that if they get a divorce, they will lose their entire nest egg. In reality, all money earned during the marriage and interest thereon is a marital asset. This includes retirement assets and pensions. These assets can be divided in a divorce to allow for each spouse to receive a portion without any tax consequence. This is done through a Qualified Domestic Relations Order (QDRO). Retirement assets get split just as any other assets do, however they generally cannot be used without a tax consequence. Some parties choose to keep a pension or retirement account in tact for one party while the other party receives more of another asset to counter balance the equitable distribution. In such a case, an accountant might be a valuable member to your team, to help understand the present day value of each asset after considering any tax effect.
- Consult a Professional – While we have experience and expertise in family law and what one could expect as a result of a divorce, it is important to rely on other experts when it comes to managing your financial picture. We have many close contacts in the world of finance, accounting and insurance that we can point you to as you plan to go through divorce, or after; to help you to best manage the money you receive as awards or to help you to manage what is left after you pay out.
If you have questions about how to ensure that your divorce does not leave you financially unstable, contact us at the Ferraro Law Group for a confidential consultation.