SmartDivorceNetwork

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Getting Married? Do You Have Divorce Insurance?

Divorce Insurance

We live in a world where we must be prepared for anything. We have insurance on our homes so they will be repaired or replaced in the event of a fire or other disaster. If we are in an accident in our car, our insurance pays for medical expenses for the injured and repairs for the automobiles. We have insurance for when we are sick, for cleaning our teeth and to bury us when we die. So, it should not surprise us to find there is insurance to cover certain expenses incurred after a divorce.

Isn’t That Bad Luck?

You may feel like taking out divorce insurance while you are married is asking for trouble. But is it really? The fact is in 39% of the marriages in the United States in 2020 (to date) ended in divorce. There have been recent years that the percentage rate has been as much as 50%.

When you decided to get married, you probably took a look at your life insurance policy. Is it bad luck to make sure your spouse is financially secure in the event of your death?

It is the same for divorce insurance and homeowners’ insurance. Insurance is just a safety net and a layer of security.

How Does Divorce Insurance Work?

Divorce insurance is not insurance that pays you in the event that your marriage fails and you end up in divorce court. There are a lot of people who might wish this is true, but it is not. After a couple has gotten a divorce and their court fees and divorce fines are paid, their divorce insurance is active. You pay a premium based on the amount of the package you choose monthly. Just like other insurances (like most life insurance policies), there is a waiting period. The waiting period for divorce insurance is usually four years. This is why it is wise to take out insurance before you need it. The policy just sits in limbo unless and until you need it.

Divorce Insurance has only been around since 2010. It has been well received and today most insurance companies carry divorce policies. However, some policies are better than others. Call your insurance company and inquire about theirs but don’t be afraid to compare. Just make sure you are comparing like plans.

Fast forward to the fifth year of marriage. Statically, 20% of marriages end in the first 5-years. In the divorce, the judge will assign child support orders and spousal payments. These financial responsibilities are in effect unless a judge changes them. For example. Maybe your child support payment, which is based on your income is $4000 per month. This is affordable for you. But then COVID-19 hits and you are laid off. $4000 per month is more than you get on unemployment. Until you go back to court and have a judge change the order, you still are required by law to pay $4000 per month!

This is where divorce insurance comes in. Your divorce insurance steps in and pays the child support until you can resume paying the $4000 per month or getting the court order changed. It is the same for spousal support. The payments you made together, as a family, now ensure financial stability. There is no resentment because the insurance premiums came from family funds. It gives the person who is laid off relief and the spouse and primary caregiver of the children relief. It is a win/win situation.

Money is a major problem in divorce. Temporary loss of income is devastating, but divorce insurance covers that. It’s a shame that all money issues can’t be settled as easily as this one. Divorced families would be so much kinder to each other when their money was secured and their payments were coming in, right on time. Divorce insurance may sound a little strange. But, if you think about it, it really is an act of love.

Did you get Sole Custody? Spell Out Contact In Your Papers

Sole Custody

When you get married and begin a family, you never dream that your family will fall into the 40-50% of marriages in the United States that will end in divorce. (In some places, the divorce rate is even higher) If you fall into these statistics, you may have to face some difficult facts.

  • You probably will get little if any child support if you have sole custody
  • 3 percent of custodial parents get some child support payments
  • 5 percent of custodial parents get full payments

Why did you get sole custody?

We all know how important it is to raise our children in a balanced environment. In a perfect world, they would have the best from a father and a mother. But we don’t live in a perfect world. You may have been awarded sole custody because your ex becomes violent when he is angry. Maybe he (or she) brings home people who are drunk or on drugs, putting the family in danger. Whatever it is, the court decided the danger is significant enough that it outweighed the need that children have for having both parents in the home,

Visitation

It is rare when a judge does not order visitation. It may be supervised visitation, but usually, the ex gets time with their children. This is where having a good attorney is vitally important. Do not settle for generic visitation terms. Insist on having the terms spelled out. Here are a few things to consider.

  • The spouse is an addict and often has other addicts with him or her
  • The judge may suspend visitation until the parent completes rehab. He may further order random testing to ensure the parent stays clean and drug-free.
  • The spouse is homeless
  • This is important. Make sure your attorney has written in your divorce papers that you must have the address and phone number where the children are going to be in case of emergencies. If they do not provide that information, they cannot take the children. They may end up taking them to a friend or relatives house to have their visit, that is allowed. As long as they are not roaming the streets all day.
  • The spouse is incarcerated
  • Of course, if the spouse is in jail; They do not have to go see them. This includes going to jail to visit with a friend or family member of the spouse.
  • The spouse has physically or emotionally abused the child
  • Be sure your attorney provides all reports and proof of child abuse to the judge. Victims are not returned to abusers.
  • If the child is old enough, and the child requests no visitation
  • By the time a child reaches their teenage years, a judge considers them old enough to know if they want to visit a parent or not and they will honor that request.
  • The spouse is a flight risk
  • If the spouse is from a different country or if he has threatened repeatedly to take the kids and leave, you probably have a good enough reason to be concerned. Have your attorney address this in court.

Don’t Pump The Children

It is hard to let go of anger, curiosity, and betrayal. When we get a divorce, those emotions linger. Because of those emotions, we may question the children just a little too much when they return home from a visit. Who went with you? Did she stay the night? Did daddy drink? These questions only serve to feed your curiosity. They not only play your child against their dad they make them feel bad. Instead, let them feel empowered. Here are examples:

  • I need you to tell me right away if anyone:
  • Hits you or hurts you
  • Touches you in a way that makes you uncomfortable
  • Calls you ugly names
  • Makes you sleep on the floor or outside
  • Will not feed you
  • Feed you pet food

Closing

Divorce is never easy. This is especially true when you have children. Your attorney needs to be very detailed in drawing up your divorce papers. If you have legitimate fears for the safety of your children, have proof to present to the judge. However, unless there is substantial proof that the children will be harmed, the judge will usually assume the benefits outweigh the disagreements of the parents.

Have your papers prepared as though you expect to allow visitation. Have stipulations asking for the address and phone numbers of where your children are.

Remember this, getting a divorce changes life. Your primary focus should be on your kids. Make the best of a difficult situation. This is your first step to a happy future. Be happy.

Paying Child Support During The Coronavirus

Child Support

There is no doubt that virtually everyone has been affected in some way by the Coronavirus. Millions of people have become ill, lost their jobs, and some have lost their lives. If you are going through or have gone through a divorce and you have court-ordered child support payments, you may think that losing your job or becoming ill and quarantined excuses you from meeting your obligation. This assumption is very wrong.

What can you do?

The first thing you should do is contact your attorney. Have them file a petition to modify or terminate your child support payments temporarily. It is very rare for the courts to terminate your child support payments.

Taking care of your children is always the top priority. If you are laid off or your company has shut down, the court assumes you will receive unemployment insurance. While this will not be as much as your salary, it is considered part of your income when the judge makes the adjustment on your payment. Further, the court understands that you are shocked at the loss of your job. However, they assume that you can take some kind of a job which will pay at least minimum wage and allow you to work 40-hours per week. Based on that assumption, they will often adjust your child support obligation according to that assumption.

Making changes

During the pandemic, Congress is protecting people from being evicted when your rent or house payments get behind. Unemployment is passing on stimulus payments as they come in. The government is helping people with food assistance. Many places are not turning off electricity or water for customers who cannot pay during the crisis.

It may become necessary to select what you will and will not be able to pay. Child-support is a priority. Bills that you are temporarily protected from paying should be the ones pushed to the back-burner. Until you have gotten your court order revised, do everything in your power to keep your payments current.

Stimulus Checks

Many people believe the $1200 stimulus payments are not part of their income and they do not have to pay their back-child support from them. This is incorrect. If you are behind in your payments, the IRS can and usually will take your stimulus check, just as they would take any tax refunds, and send it to your ex-spouse to help catch you up. If you do not owe the entire $1200, you will get a reduced check and it probably will take a while.

Do I have to tell my ex that I lost my job?

Regardless of why or how you have lost your job, you need to report it to your child support agency within 10-days. You will probably have to go back to court to have your payments adjusted, so it is a good idea to contact your attorney.

Your divorce papers will tell you if you are ordered to advise your ex-spouse if you have had a change in employment. If it is not in your papers then you don’t have to tell them. However, it is always a good idea to keep a good relationship with the other parent of your children. Being civil and respectful of each other will make it much easier to face these problems. If that is not possible, speak to your attorney and make your decision accordingly.

You are not alone. COVID-19 has disrupted the lives of millions of people all over the world.

It is a stressful time and families are making hard choices. Everyone is experiencing the same issues. We are all watching our money closely, being less wasteful, and making special arrangements for the education and care of our children. The best way to survive this difficult time is to work together, We do not know how long this will go on. We do not know what challenges lie ahead. But, we know there is more to come. Now is the time to remember that we all want the same thing. We want strong families with healthy and happy children. It will take more than a pandemic to stop us. Because our kids are worth the battle.

Labor Day Holiday and Your Divorce

Labor Day Holiday and Your Divorce

When Americans think of Labor Day weekend, they think of the end of summer. Most of us head for the parks for picnics, camping, cookouts, and family fun. Many cities sponsor parades, and most retailers hold major sales to move the last of their spring and summer merchandise at great sale prices. Schools are back in session and we are all preparing for a fall season which is just around the corner.

The American Worker Of The 1800s

In the late 19th century, America was a much different place to live. The average American adult worked 7-days per week and up to 12-hours per day. Children as young as 5 or 6-years old were often put to work in factories and mines and a fraction of the pay that adults drew. The working conditions were unsafe on many levels and the workers who held those positions were mostly the poor or immigrants began to demand better working conditions.

People began to protest and many of the protests became heated. One example is The Haymarket Riot of Chicago.  Another example comes for New York City where 10,000 people took unpaid time off to participate in a march that drew national attention to their fight for justice for fair treatment for the American worker.

We are the winners

The battles that these people fought paved the way for all of us to be able to work in clean and safe environments. We are no longer expected to work as pack animals without clean air, breaks, and time off to be with our families. We do not sell our lives to our employers. We are treated with respect and protected by law.

Celebrate the American Worker

On June 28, 1894, President Grover Cleveland signed a law declaring Labor Day a national holiday in honor of the American worker. Labor Day had actually been celebrated on a local and state level in many states since 1882, but once President Cleveland signed it into law it became law and the date was set for the annual event. This holiday takes place on the first Monday in September of each year.

 

Celebrate the American WorkerPhoto credit: Katie E

How is Labor Day divided between divorced spouses?

In most cases, schools are closed for Labor Day on Monday only. In divorces, the general rule of thumb is the custodial parent gets the child or children on the years that end in an even number and the non-custodial parent gets the child or children on the years that end in an odd number. Again, unless otherwise noted, visitation begins at 6 PM on Friday of the assigned year and ends at 7 PM on Monday (Labor Day) of that weekend.

However, if the child has a school or other normal arrangement that is out for the holiday on Monday and Tuesday for the Labor Day weekend, the parent who has visitation that year will extend their visitation until Tuesday at 7 PM to accommodate the child’s or children’s change in schedule. This is normal and expected.

If there is anything above and beyond the normal arrangements, it is encouraged that the parents try to work things out between them and keep the arrangements as easy as possible for the children. The child should have a normal routine as often as possible and not have to miss classes and events due to the inability of the parents to work things out between them.

Labor Day is a holiday that celebrates the hard-working American. The people of that generation fought long and hard to make life easier for us. This is the same mindset we should have when we work together as parents. Work hard today for a better tomorrow for our family.

 

Feature picture credit: Kaboompics.com

It’s a Pandemic – Choose Your Battles

Divorce? Choose Your Battles

Maybe you have already filed for divorce or maybe you are still in the process. You have worked out an arrangement you both can live with concerning visitations. Good for you. However, you need to remember that under the best of situations, visitations cause major problems in divorced families. Once your divorce agreement has been decided, it is very important that each of you follow it to the letter.

Enter Pandemic

We would all like to think we are reasonable adults when it comes to the well-being of our children. We are under the instruction of our town leaders to keep our children in our home during this time in the pandemic. We are taking all the steps possible to limit exposure to germs including the wearing of a mask,  deep cleaning of their toys, and the use of anti-bacterial wipes.

Our ex-spouse does not feel these steps are necessary. They feel the children need to be on the playground with other children. They believe the pandemic is being “exaggerated” by the media.

Your divorce says the children spend 4 days per week with you and 3 days per week with them.

Common Sense?

You are not the first parent who has read something like this and thought they would just keep the children home, for their health. However, most judges frown on changing visitation rights. You can pay your attorney to fight this cause.

Before this blows up in your faces, try to find some common ground. Now is the time to put down the boxing gloves and try to reason with each other. Don’t get lost in the battle of what is media-hype, how bad the pandemic is, and who is to blame. Instead, agree to disagree and go to ways you can solve this problem. You may have to get creative, but you can do it.

Common SensePhoto credit: Andrea Piacquadio

Ideas

Here are a few ideas that can get you started. Keep your eye on the goal. The goal is to let everyone spend time with the child without exposing them to the virus.

(Note: Be sure you speak to your attorney before making any changes)

  • Agree to Skype visits or IPhone visits each night. This can include storybook time, watching a movie together, or playing various games.
  • Let the parent have their visit to your home a couple of days per week. Let them have the run of the house while you busy yourself in another room.
  • Agree to meet the spouse with the child at a playground early in the day while it is less crowded. That way you can ensure their mask is worn and their hands are cleaned when they are finished.

Offer to keep up with the number of days they missed and when the pandemic is over schedule a vacation to make them up. Be sure to record all of the arrangements.

You’re The Parent

At the end of the day, you are the parent. You must do what you must do. We are not giving you any advice to change the visitation of your divorce. This is very serious. This is not a decision to be taken lightly. We are suggesting that you open a dialog with your ex and you try to work things out like adults. At the end of the day, your child is the most important person in this situation. Again, keep good records and be sure to talk to your attorney. You have to protect your child, and you need to protect yourself as well.

Five Mistakes Couples Make While Divorcing

Mistakes

When a couple has reached the point of divorce in their relationship, they face one of the most difficult and trying times in their lives. The decision of divorce begins to tear away the moral fiber of the family, long before they enter a courtroom. During such an emotional time, the help of an experienced and skilled attorney is invaluable. This article features five mistakes that are commonly made by a divorcing couple. Avoiding these errors will ensure the future of all people involved.

1. Relationship disasters

When divorce is inevitable, honest communication is key. No matter how hard it is, your partner deserves the respect of being told of your plans. Sneaking around to accomplish your agenda without letting your spouse know, is immoral and it destroys trust. While you may not think trust matters at this point, you are wrong. There are many details to attend to when dissolving a marriage, and taking “shots” at each other will make them more painful and less productive. Here are a few examples of behavior that will destroy trust:

  • Moving possessions out of the home a little at a time so your spouse will not notice.
  • Talking about your spouse to your family and friends in a negative light.
  • Securing a new living arrangement before your spouse knows you are leaving.
  • Changing important things like insurance coverage, bank accounts, and mailing addresses for your mail.
  • Being stubborn and unwilling to reach an agreement with your spouse regarding separation.
  • Dating and putting yourself on the “market” before the divorce is final.
  • Using your child to side with you just to hurt your spouse.
  • Hiring a strong-willed attorney for the purpose of punishing your spouse.

2. Money / Finances

Money is probably the single most fought about the topic during a divorce. No matter how involved a person is in the family finances, rarely will they know everything that needs to be addressed. There are so many financial considerations in a divorce that we could write an entire article on this mistake. Here are some highlights:

3. Underestimating your financial needs

  • Sometimes we think we need less to live than we do. Reality never quite compares to the numbers on the paper. Living expenses, child care, illness, and job loss are facts of life. If a person is surviving on a financial tightrope, they are asking for a disaster.
  • Failing to consider investments, interests, taxes, and other financial matters can ruin you financially.
  • Trying to hide or hoard money so your spouse is unaware of it.
  • Trying to save money by canceling health insurance policies, life insurance policies, and automobile insurance.
  • Selling possessions before your spouse knows of your divorce plans.
  • Canceling credit cards, or charging excessively for spite

4. Giving it all 

  • Some people simply think they can walk away with the shirt on their back and give their spouse everything and everyone will be happy. The truth is, both spouses will have responsibilities to creditors, the children, and their future. While walking away seems like a good idea when you want to escape the fire, it will come back to haunt you. Instead of throwing up both hands in defeat, allow your attorney to negotiate a settlement that works for everyone.

5. Not accepting mediation

  • Even in the most civil divorces, problems arise from property division, child custody, child support, retirement considerations, financial obligations, and alimony. Allow a mediator to advise with a logical and fair agreement that benefits both spouses and more importantly protects the children.
  • Seek further help if you need help with co-parenting or learning to maintain a positive parenting relationship.

It is important to conduct yourself properly during the divorce. A good family law attorney will expose the wrongs you attempted when you go to court. If the judge believes you are hiding assets or being unreasonable, he may lean more toward the spouse who is putting the needs of the children first, and trying to maintain a healthy relationship with their soon to be ex. Being difficult as a way to hurt each other, fighting, and just being cruel will not earn you any points with the court. Instead, opt for a civilized and fair divorce for the sake of everyone involved. Now is the time to love your children more than you dislike each other. Being an adult means we do not always have to act on our feelings. Divorce will test you, but with the right support and attitude, you will survive and come out stronger.

Can Your Divorce Be Denied?

Divorce

In our society divorce is a common word. The days of divorce causing scandal and shame are long gone. However, when a family goes through a divorce they find it is anything but a normal everyday occurrence that people go through.

State Laws

Every state has laws regarding divorce. All the states in the United States allow a couple to file for a no-fault divorce. This means you agree that the marriage is over. Your differences cannot be reconciled and your marriage cannot be saved. Some states only allow no-fault divorce. They do not allow the option of filing for a divorce that assigns blame against one partner to the other. These states include:

  • California
  • Colorado
  • District of Columbia
  • Florida
  • Hawaii
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Michigan
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • Oregon
  • Washington
  • Wisconsin

If you live in a different state and you wish to file an at-fault divorce, you need to contact your attorney. There are several grounds for an at-fault divorce that will hold up in court. They include, but are not limited to:

  • Adultery
  • Incest
  • Imprisonment
  • Bigamy
  • Abuse

It is important to note that filing for an at-fault divorce requires proof that will be submitted to the judge. It is also important that you and your children (if you have children) remain safe while you are seeking a divorce. An attorney is the best place to begin. He can advise you on what you need and how the procedures will progress so you can make a plan to be safe during the process.

Why would the judge turn the divorce down?

A judge is in a unique position. While he is charged by the American people to listen to both sides and make a fair and impartial judgment, he is also required by law to ensure all legalities of the case are met.

When a person is sued for divorce, he or she must be served with legal documents that explain in detail what is happening. This is not handled over the phone or verbally. The papers explain where they need to be and the date and time. The results of the summons will affect their lives. This could include their visitation with their children, where they will live, how much they will pay in support, and what they will take with them from the joint property they own. If they have been properly served and they do not show up, the requests of the person suing are usually granted. But, what if the person suing did not properly serve them? In that case, the divorce is usually denied. 

There are several requirements in a divorce filing. Each form has a purpose and none of them can be overlooked. If you miss a required form the judge may dismiss your case and deny your divorce.

If during your filing process it is discovered that you do not meet the state residency requirements to file in the state where you filed, the judge will deny your divorce.

If you have not shown accurate reasons why you are dividing the custody/visitation of the children (and sometimes pets), property, and assets of the family the way you presented them, the judge will usually deny your divorce. A judge is not going to be unfair and let one person have the lion’s share of everything earned in a marriage.

Fraud

When we think f fraud, we think of very high-level business people “cooking the books” trying to get away with not paying taxes or sliding sales under the radar. The same happens with marriages. When someone has a long term marriage and they have built a successful business, they may start to worry when the winds of romance seem to shift. Perhaps they feel divorce is in the air. Whatever the reason, they begin opening accounts that their spouse (and CPA) knows nothing about. They build it up until it is substantial. When those dollars are exposed, a judge will halt the divorce and usually order a complete audit.

Fraud will cost you the divorce you are seeking, even on a lower level. This is rare but not unheard of. This means you have no intention of breaking up. You are going through a divorce so you can benefit in some way. One example would be, there is a program that will send in workers to do home repairs at no cost for divorced women over 60 that are unable to afford them. You file for divorce and they repair your roof, paint your house, and pave your drive-way. You use their reference to get free food and money for your electric bill. This is a fraud. The judge will not grant you a divorce. Further, you could be facing charges.

Note: In some cases, fraud will result in an annulment instead of a divorce.

Children

The judge will not grant your divorce until you have worked out all the issues regarding child support and child custody. You can go through mediation and arbitration for help, but you need to have it hashed out or no divorce is going to happen. Your next step will be going to trial to get it settled and that is not good for anyone.

Spouse won’t sign the papers

This is a delay tactic that will not work for very long. If you have done everything you are supposed to do, you may have to have your spouse formally served with the outline of everything included. If your partner does not respond or if they do not show up for court, the judge can approve a default divorce.

In order to avoid the delays, the “do-overs” and the mistakes, hire an attorney. It will be much easier and will reduce your stress level. Let the attorney do what he is trained to do. Let this difficult time in your life pass as easily as possible so you can begin the next chapter of your life.

Reasons a DIY Your Divorce Is Not a Good Idea

Divorce

If you look back over society, you can see that what people accept as “normal” tends to change. As recent as the 1950s, people were expected to graduate from school, get married, and begin a family. The generation that required marriage, did not look kindly on divorce.

In the 1960s everything changed. Teenagers and young adults rebelled. They insisted on “free love.” The idea was everyone should be allowed to love anyone they wanted to without a lifelong commitment.

Over the next three decades, the marriage dynamics continued to evolve. This grew to include living together before marriage, same-sex marriages, interracial and interethnic marriage.

Unfortunately, the freedom that brought back matrimony also brought acceptance for divorce. Currently, 39% of marriages end in divorce. No one is ashamed. It is a fact of life and the price of evolution.

Courts

Perhaps because divorce is so easily accepted and information is so easily attainable, people have started using their computer’s file for divorce on their own. They are told where to find the paperwork and they fill out the papers, file them with the courts and in so many days, the divorce should be final. But, is that a good idea? Below, we are going to tell you a few important reasons why DIY divorce may not be in your best interest.

  • What is fair and normal?

You do not get the benefit of expert advice from an attorney to explain what is considered normal. You may not know about the laws pertaining to residency or how child support should be determined. What is taken into consideration when parenting plans are prepared? You may accept a plan to keep everyone happy, that is completely unfair to you. Later, you may regret being so accommodating.

  • Stress

The legal system is nothing if not confusing. There are a lot of details that must be contended with. Even attorneys have trouble keeping everything in order when they are new. You need to be aware of the state laws and requirements and be sure you have completed every form and filed everything on time. This task in itself is worth having an attorney on your side.

  • Court

With the proper care, you possibly could get a divorce and never go to court. But usually, a court visit is required. Besides the issues you can face with forms being missed or filled out incorrectly, you have to work around the judge’s schedule. The courts are very busy. The fact is, you have a good chance of facing delays. That could result in the forms having to be re-worked, re-filed. Your time and the time of your family is not an issue that the court considers.

  • It can cost you more money

You began this DIY divorce to save money. You were sure you and your spouse were reasonable and you could work things out. But things can take turn for the worse. You may end up fighting for custody or fair visitation. You may end up in a fight over an unfair property settlement. In order to be financially secure and to protect your children, you may have to then hire an attorney to help you. Unfortunately, some things are not reversible.

  • No mediator, shoulder to lean on, back up

When there is a divorce some people can get real ugly. They know they have things that you want. They will use these things to their advantage. They will bully you, threaten you, and push you around during this stressful time. Just when you think you have it all worked out, they start again. With an attorney, you have the support you need from someone who has no emotional investment in the transaction. They know the law and they will not be bullied.

  • The agreement may not be binding

You and your partner may have come to an agreement together. You are both comfortable and you believe everything is in order. The problem is, neither of you knows the law. While you are comfortable, the wording of the agreement may not be legally binding. If problems come up in the future as the two of you go on with your lives, you may find that your divorce is not enforceable in court. An experienced attorney would have prevented this problem and ensured your divorce would have held up even 10-years down the road.

Divorce is difficult. We all want to get through it as painlessly as possible. We want to save money and draw on the good nature of our spouse and just charge through it. But, it is rarely that easy. While you can do your own divorce, it doesn’t mean you should. Make your life easier and hire an attorney so when your divorce is final, you know it is actually final. Then you can move on without worry that it will ever come back to haunt you.

The IRS FAQ For Early Retirement Withdrawals During COVID-19

IRS

Most of us who work full time for a company (privately or self-owned) have some type of retirement plan that our employer helps contribute to. In this article, for ease of communication, we will call them 401K plans in this article, but there are many other types with various names.

Your company administrator can help you with any questions you have about your plan. During the COVID-19 pandemic, people are looking at all of their options for staying financially ahead and their retirement plans often offer a way to borrow a substantial amount of money rather quickly. Let’s take a look at this option and how it is viewed while you are in the process of filing a divorce.

Can I borrow from my 401K if I am getting a divorce? 

The easy answer is, it depends. You will need to speak to your attorney. While in most cases the retirement funds will be divided 50/50, that may not be the problem. In some states, one spouse cannot take money from the account without the signature of the other. It may not be so easy to get your “soon to be” ex, to happily sign their name so you can get up to $100K of your money to make your life easier at this time. You may have to do some bargaining to ensure it makes their life easier too. During a divorce, both of you may need some financial support and it may be an option they had not considered.

In normal circumstances, if you are younger than 59 ½ years old and you need to borrow money from your retirement funds, you are charged a 10% penalty and some steep taxes and penalties. This is to encourage you to find another way to get through your situation and leave your 401K untouched. But, a worldwide pandemic is not a normal situation and the government stepped in, to wave taxes and penalties so you can access your money fast.

The IRS answers FAQ 

Almost immediately, when the IRS published the relaxed rules, people began drawing their money out of their plans. The maximum they could draw was $100,000 and that number was requested over and over again. Read on for more information.

Below we will list some of the most common questions asked to IRS. Due to the massive number of retirement plans and the numbers of people that are involved, you may have to research your retirement plan to see where it fits. Of course, you can ask your retirement company, your retirement plan administrator, or the Internal Revenue Service for clarification.

  • You qualify if you or your spouse or dependent tested positive for COVID-19. If your life has been impacted by the pandemic (even broadly) there is a good chance you qualify. If you lost your job or a portion of your income, or if you were unable to work because of a loss of child care or even if you own your own business but had to work fewer hours due to the pandemic, you most likely qualify.
  • The maximum you can take as a withdrawal or a loan is $100,000. This is the same for ex-spouses who were awarded retirement funds belonging to a previous spouse.
  • In some cases, you will be allowed to treat the loan like a short-term loan and repay it without penalty. This is not true for all plans. Your plan administrator can advise you. If your situation in this time of a pandemic improves and you want to replace the money you took from your plan, you should expect the payments to be expensive. They are usually paid back over a period of 3-years and the payments are over $1800 per month. However, if you are in a situation where you can do this and your plan allows it, repayment puts your savings back to the original position.

Bonus hack for older employees 

During our working lives, Americans pay 6.2% to the federal-set wage base. Our employers match our contribution. When we reach the age of 67, we can begin drawing that money in monthly checks from the Social Security Administration.

Sometimes life does not follow our plans. If you are a 62-year-old employee and COVID-19 caused you to lose your job, it may not be easy to find another job right away. While you will receive less money per month, you can begin your Social Security payments early.

Now let’s say a year down the road, you have returned to work. You can contact SSI and ask them to “voluntarily suspend” your payments. Your payments will be stopped and interest will be paid into your SSI account. If you begin your SSI payments when you have reached the age of 66-years and 2-months, your payments will be within a few dollars of the original plan amount.

This does not restore you to your original position, but it gets you very close. It also allows the person who is retiring to control their own destiny. Some people do not want to retire early. They want to plan their own lives around the schedules of their families and loved ones. The few dollars they return to their SSI may or may not make a difference to their quality of life.

Regardless, it is their choice to make. This option allows them to do just that. Make their own choices. This just might be the option you need to allow you to get through this difficult time with a little less stress.

The Difference Between a Divorce and An Annulment

Annulment

When we marry someone we love, we hope that the union is forever. We hope our love will grow and as it does, we will put all of our efforts into cultivating our trust, dedication, and loyalty to each other. However, sometimes it simply doesn’t happen. Sometimes, we grow in different ways, and sometimes our love grows cold. Sometimes, there is nothing that can save the marriage and it is reasonable and agreeable to legally end it.

File for divorce

When a couple decides to end their marriage, they usually contact a divorce attorney and file for a divorce. This is the most common way to end your marriage. Both spouses will hire an attorney. A value will be set on the family assets and they will be divided. The couple will work on issues such as who will keep the family home or if it will be sold. Here are other very important things that will be decided:

  • Who will have custody of the children
  • Visitation of the children
  • Who will have custody and care of the family pets
  • The amount of alimony to be paid and which spouse must pay it
  • The amount of child support to be paid
  • Who will pay for medical insurance for the children
  • How retirement funds will be divided

As you can see, the majority of the considerations are about money. Children cost a lot of money to raise. Just because parents are divorcing, doesn’t mean the children should have to suffer. The children are already dealing with the loss of a parent in the home, they should not have to struggle with the loss of their activities as well.

Annulment

There is a second way to end a marriage. This is a less common way, but it is a legal way. Further, when you seek a divorce, you record states that you were married but divorced after “X” number of years. An annulment voids your marriage. Your record reflects that you have never married. There are a few reasons why the court will consider an annulment. Again, the end result is a civil annulment, which means in the eyes of the law, your marriage never happened. They take this very seriously. You will need to contact your lawyer for a complete list, but here are some of the more common reasons:

  • Fraud
    • You were lied to about your partner’s age which caused or could cause legal problems.
    • Your partner was already married to someone else. They did not obtain a divorce, nor did they tell you about their marriage
  • Concealment
    • Your partner hid a felony record from you
    • Your partner was in an illegal crime ring which put you in danger
  • Important Misunderstanding
    • One of you did not or do not want to have children. This deal breaker was not discussed before the wedding
    • One of you are impotent and did not tell your partner, preventing them from being able to have a child in the marriage
    • Incest – the discovery that the two of you are close family relatives
  • Lack of consent
    • Being forced into marriage by the spouse, parent, or physical force

Annulments are governed by the laws of the state. When the state rules on an annulment it is legally settled. However, many people feel the need to have their church rule on the annulment as well. That is certainly your right. However, regardless of the rulings of the church, once the state has annulled the marriage, it will forever be annulled in the government systems.

In the Catholic Church, a diocesan tribunal hears your case rather than a court. You present facts that help them decide if the marriage was less than a covenant for life. You have to show them that it was lacking in some way from the beginning. It can be based on dishonesty, immaturity, and most of the reasons listed above. Either spouse can request the annulment.

If the annulment is granted, the spouses will be allowed to marry again (since the first time never happened) in the Catholic church.

Note: State annulment and church annulment have three things in common.

  • The original marriage never happened
  • The couple can remarry
  • The is no question to the legitimacy of the children

If you have questions, contact your attorney. The sooner you act, the sooner you are free from this world-changing event in your life.