No Cuss No Fuss Divorce

09/14/2020

Pre-Divorce Checklist

Source:2018 Karen Covy Enterprises, LLC
Forwarded by: Udai V. Singh, Family Law Attorney; 404-918-8167

Financial Items
1. Pull your credit report.
2. Open credit card accounts in your own name.
3. Open checking and savings accounts in your own name.
4. Get copies of all financial documents you will need in your divorce (Get my
Divorce Document Checklist for specifics.)
5. Make a budget of what you and your spouse earn and spend now.
6. Make a budget of what you will earn and spend after your divorce.
7. If you are covered under your spouse’s health insurance policy, research how
you can get your own insurance, and how much it will cost.
8. Get a realtor to give you an estimate of what your house is worth.
9. Investigate all of the employee benefits that you and your spouse have. Make
sure you understand what each of you has, and what it is worth.
10. Make a list of all of your assets and liabilities. Get as much documentation of the value of each item as possible.
Personal Items
1. Get a good therapist.
2. Consider joining a divorce support group if you think that would be helpful to you.
3. Put irreplaceable personal property(jewelry, family heirlooms, family photos) in a safe place before your divorce.
4. Figure out how you are going to pay the bills while your divorce is pending.
5. Figure out how you are going to pay the bills after your divorce.
6. Deal with any health issues before your divorce is final.
7. Get a PO Box and re-direct your mail.
8. Change your email and electronic account passwords. (Note: Do NOT change
the passwords on your joint accounts without discussing it with your spouse
and/or attorney beforehand.)
9. Change your social media passwords. Be careful what you post on social media
during your divorce.

Family Items
1. Make a plan for how you (hopefully with your spouse) will tell the children about the divorce.
2. Make a proposed schedule for when you and your spouse will each see the
children during the divorce.
3. Figure out the best time to tell your children’s teachers and other appropriate
professionals about the divorce so they can help your children deal with their
changing circumstances.
4. Get your children into counseling if necessary and appropriate.
5. Make a parenting plan. Remember to deal with all important religious, medical,
and educational issues as well as just parenting time. (Request a copy of Parenting Issues Checklist for Specifics.)
Legal Items
1. Think about HOW you want to divorce, and research the various ways to get
divorced.
2. Find a good divorce lawyer who specializes in handling divorces in the way you
want to get divorced.
3. Provide your lawyer with all necessary financial information.
4. Consider revoking any personal and healthcare powers of attorney you may
have. (Talk to your lawyer about this first.)
5. For women - Make sure that your lawyer knows whether you want your maiden
name back.
Post Divorce Checklist
1. Make a new Will, Power of Attorney, and Healthcare Directive.
2. Change the beneficiary on all of your retirement accounts, investment accounts
and life insurance policies (unless your divorce judgment says otherwise).
3. If you are changing your name, do so on all of your credit cards, bank accounts,
and online accounts. Remember to change the name on your driver’s license,
passport, and social security card.
4. Change vehicle titles (if necessary).
5. Make sure that any retirement funds that were supposed to get transferred to you
actually get transferred.
6. Make sure to transfer all funds from bank and investment accounts in
accordance with your divorce judgment.
7. Pull your credit report again.
End

06/18/2020

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06/11/2020

Paycheck Protection Program (PPP) Loans and Child Support (COVID-19)


A family lawyer asked if a loan received under the Paycheck Protection Program (PPP) will be considered income for purposes of the child support obligations of the business owner.

The simple answer:
Loans are not income. The business is not receiving money as a result of selling any products or services. It's simply a pile of cash from which the business can operate, and under normal circumstances, the business has to pay back the money.

The complicated answer:
A business owner often has two sources of income that are factored into child support calculations: a paycheck and the net profits of the business. Let's start with the paycheck. The purpose of the PPP money is to continue paying employees. That includes the business owner. For many business owners, there will likely be no change here. He or she got a paycheck before, took out the loan, and continues to get the same paycheck.

For some, however, this may get tricky. Suppose the business owner takes the loan under the guise of paying payroll, but then doesn't pay herself. You have to figure out whether she did not take a paycheck for the health of the business or whether she did it to manipulate the child support calculations.

The loan application will help here, since the business owner has to report how many employees are included in the loan amount requested, show the payroll calculations, and provide supporting documentation. If the business owner's salary was included in the calculations to obtain the loan, I'd suggest that the owner should have taken a paycheck.

Let's move to the net profits of the business. Due to the COVID-19 pandemic, revenues of businesses are likely to be down, which means profits will be down too. A PPP loan may replace some of that income if the loan is forgiven. Suppose the company takes out a loan of $100,000, uses it all for payroll and allowable business expenses and has $80,000 forgiven. The $80,000 becomes income to the business because it's now "free money."

There's an additional wrinkle, though. The law authorizing the PPP loans says the $80,000 of loan forgiveness will not be considered income for the purposes of paying income taxes. So you probably won't see the $80,000 on an income tax return. But I'd say that for the child support calculations of the business owner, you should be sure the money is included in the calculation of the net profits. It's still income to the business, even if it is not taxed.

Don't expect that business owners are going to make money because of the PPP loans. The whole idea is that the money is used to pay employees when revenues have been negatively impacted. Even if there is loan forgiveness, most companies won't see an increase in net profits because of it. However, it is an important issue that should be examined carefully when you're doing the child support calculations.
By: Mike Bean, CPA
Sources: Tracy Cohen "Paycheck Protection Program (PPP) Loans and Child Support (COVID-19)." Fraud Files Forensic Accounting Blog, 8 Apr. 2020, www.sequenceinc.com/fraudfiles/2020/04/paycheck-protection-program-ppp-loans-and-child-support-covid-19/.

A family lawyer asked if a loan received under the Paycheck Protection Program (PPP) will be considered income for purposes of the child support obligations of the business owner. The simple answer…

08/14/2019

5 Ways Divorce Affects Your Credit
You can recover from a broken heart and broken finances.
By Paul Sisolak, Contributor.

5 Ways Divorce Affects Your Credit

Wedding cake visual metaphor with figurine cake toppers
The financial pros and cons of calling it quits. (Getty Images)

A divorce can be one of the most traumatic life events a person can experience. During and after the dissolution of a marriage, both spouses can have trouble coping with feelings of loss, failure, regret – and both can struggle financially as well.

Legal fees, asset-division, child support and alimony can ruin otherwise healthy finances. Contrary to what you might think, however, none of these aspects of divorce will directly affect your credit score.

If you're in the midst of a marital split, consider some of the positive and negative ways a divorce can impact your credit indirectly and how to prepare yourself to recover financially.

1. Your Ex Stops Paying for Joint Accounts

Many spouses jointly share credit accounts, like a mortgage or credit cards. In some cases, those accounts could still remain in both your names even after a divorce. If your ex begins making late payments or stops paying altogether, you are still responsible to pay those bills in full. Failure to do so can hurt your credit.

Your lenders want to be paid no matter who foots the bill and no matter what your divorce contract states. If you're on amicable, cooperative terms with your ex, you might be able to work out mutually beneficial payment arrangements. A spiteful ex, however, might avoid making payments or begin racking up debt to cause you trouble.

If you and your ex don't want to maintain a joint account – or can't – then you might need to make changes to the account. Lisa Hutter, senior vice president and regional wealth planning manager at Wells Fargo, suggests people consider one of the following options based on what the lender will allow or accommodate:

Freeze the account pending resolution
Remove your ex from the account so that the account is in your name only
Close the account and re-open it in your name only
In some cases, these actions or changes to account activity could initially ding your credit score, but once you've re-established an on-time payment history, you'll be able to build up your credit score again.

2. Your Divorce Expenses Result in Too Much Debt

A costly divorce can cause you to miss bill or loan payments, rack up credit card debt or be subject to a lien on your house, all of which can hurt your credit. "A complex custody litigation can cost upwards of $20,000, and most people don't have that kind of cash on hand and have to borrow the money or fall behind on other bills," says Joleena Louis, a divorce attorney in New York City.

Louis advises her clients in these cases to use marital assets, like a house or car, to pay off any existing debt that has gone unchecked in the midst of an expensive divorce. Creating a post-divorce budget, increasing your income, and decreasing your expenses in order to keep your credit in check are all steps you will likely need to take in order to weather this financial storm.

Your pre-divorce standard of living might not be possible now. "You won't be able to have the same lifestyle you had during the marriage," Louis says. "And you will likely have to downgrade many things."

3. Your Soon-to-Be-Ex Objects to Selling Joint Assets

Financial disagreements are often at the root of many divorces, and those issues can persist even after the split is official. If, for example, one ex-spouse doesn't want to sell one of the marital assets, like the primary family residence, then both of you will still be on the hook for the loan, and your credit will be vulnerable.

"Traditionally, if the husband and wife are both on the mortgage and one party moves out, then whoever is going to remain in the house should refinance the mortgage in their own name," says Gregory Frank, co-founder of DivorceForce.com.

Generally, with loans or credit products, once the asset has been refinanced in your ex-spouse's name, your slate is wiped clean, and your legal and financial responsibility is absolved, according to Florida law firm Ayo and Iken.

4. Your Credit Report Has Red Flags for Lenders

Never mind getting back into the dating scene after your divorce and trying to look attractive to new people – you really need to make sure you're still attractive to lenders. Your ability to stay on top of your bills and avoid too much debt is only part of what lenders consider. Review your credit report carefully and make a plan for how to improve it over time.

"After a divorce is finalized, sometimes people have accrued significant legal bills, child support arrears and penalties and interest for a myriad of reasons,"Frank says. "This can make it virtually impossible to be approved for a rental apartment, a mortgage, a car, even a credit card."

Frank recommends not taking your attorney's word 100 percent of the time if the advice could inadvertently sabotage your long-term financial goals. If your lawyer advises you to hold off paying a bill, for example, make sure that you think of the long-term consequences. Not paying could pose a problem for your credit.

Don't hesitate to contact your credit providers if you have trouble paying your bills; they might be able to work out a payment plan or other arrangement to help you avoid late payments, avoid incurring more debt and keep your credit utilization low. Then, you'll be more likely to be approved for loans and other forms of credit to help you move on from your divorce.

5. You Rebuild Your Credit After Your Divorce Is Final

If your marriage left your finances in shambles, a divorce could be the best thing to ever happen to you and your credit. It's a chance to start your personal and financial life over again and make some positive changes. But if you fail to take the right steps, your credit – and your well-being – won't improve.

A divorce can prompt you to seriously examine your financial future as you re-enter the world newly single, according to personal finance expert and author Harrine Freeman.

If those joint accounts are gone, open new ones in your name and rebuild your credit on your own, Freeman says. She recommends taking the following actions:

Control your spending
Create a budget and stick with it
Track your spending and borrowing to stay out of debt and keep your credit on track
If your ex-spouse was the one who handled household money matters, take the time to learn about good financial habits and consult an advisor, if necessary
Perhaps the best way to help keep your finances healthy following a divorce isn't specifically financial at all: "Develop a support network," Freeman says. "Friends, family, co-workers, church members – join support groups to get advice, support and encouragement that you might not have had previously with your ex-spouse."

08/05/2019

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