5 Financial and Income Tax Pitfall to Avoid in Matrimonial Dissolution

My friend Arnold is a CPA. We often discuss the tax aspects of divorce. Recently over dinner in Tucson, he recently gave me an article by John F. Raspante, CPA and Arthur Garcia, Esq. from a publication of the New York Society of Certified Public Accountants dated of all dates April 15, 2010 entitled "5 Financial and Income Tax Pitfall to Avoid in Matrimonial Dissolution." I knew the items but they are worth repeating.

Pitfall 1: Sale of Principal Residence – Capital Gains
Pitfall 2: Qualified Domestic Relations Order (QDRO) – Alternate Payee (Pension)
Pitfall 3: Insuring the Property Settlement – The Revenge of Death (Life Insurance)
Pitfall 4: Unsecured Debt – The Irresponsible Former Spouse
Pitfall 5: Closely Held Business – The Investigation and Valuation

When you get a divorce you should make sure these and many more pitfalls are discussed with your mediator, attorney, and accountant.

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Divorce According to Harold, the Mover

Some boxes, pictures, and my carrom board recently were delivered to my home by Harold. As usual I chatted with Harold as he moved the boxes off the truck and I checked them off. The topic got around to divorce. Harold told me that divorce changes nothing. He said if you drank before you would drink after. If you cheated on your spouse you would continue to cheat on your new significant other. He said there was very likely that if you remarried it would be someone like your previous spouse. As a person who has counseled couples for 30 years that they could have a new beginning this was quite a revelation. I certainly have seen many individuals get a fresh start but I think Harold observation is very important. If individuals want a different life, they have to work at it and be careful they don’t repeat the behavior which caused them to get divorced.
As always, you can post any comment about this blog or Divorce Mediation, or just Mediation by following the directions at the right in the green column or at the bottom of this website. Learn more about mediation at http://www.center-divorce-mediation.com/ WM(173) 4/27/10

Delaying Divorce in Arizona Part 3

We continue to monitor the bill in the Arizona legislature to extend the waiting period for divorce.
The bill as amended was signed by the Governor on April 7, 2010. You can see the law as amended below. It would appear that the final version kept the 60 day waiting period but allowed a party to request an extension. This shifts the burden to the party who wants more time and not less.
"Sec. 2. Section 25-381.18, Arizona Revised Statutes, is amended to read:
START_STATUTE25-381.18. Dissolution of marriage; legal separation; annulment; stay of right to file; jurisdiction for pending actions
A. During a period beginning on the filing of a petition for conciliation and continuing until sixty days after the filing of the petition for conciliation, neither spouse shall file any action for annulment, dissolution of marriage or legal separation, and, on the filing of a petition for conciliation, proceedings then pending in the superior court are stayed and the case shall be transferred to the conciliation court for hearing and further disposition as provided in this article. All restraining, support, maintenance or custody orders issued by the superior court remain in full force and effect until vacated or modified by the conciliation court or until they expire by their own terms.
b. if either party wants to extend the stay under subsection a, that party shall file a petition with the court stating the basis for the extension, which may include a plan for reconciliation or a counseling schedule. the court shall grant an extension of up to one hundred twenty days unless the other party establishes good cause for proceeding without delay.
B. c. If, however, after the expiration of the period prescribed in subsection A and any extension granted under subsection b, the controversy between the spouses has not been terminated, either spouse may institute proceedings for annulment of marriage, dissolution of marriage or legal separation by filing in the clerk's office additional pleadings complying with the requirements relating to annulment of marriage, dissolution of marriage or legal separation, respectively, or either spouse may proceed with the action previously stayed, and the conciliation court has full jurisdiction to hear, try and determine the action for annulment of marriage, dissolution of marriage or legal separation and to retain jurisdiction of the case for further hearings on decrees or orders to be made. The conciliation provisions of this article may be used in regard to postdissolution problems concerning maintenance support, parenting time or contempt or for modification based on changed conditions in the discretion of the conciliation court.
C. d. On the filing of an action for annulment, dissolution of marriage or legal separation and after the expiration of sixty days from the service or the acceptance of service of process on or by the defendant, neither spouse without the consent of the other may file a petition invoking the jurisdiction of the conciliation court, as long as the domestic relations case remains pending, unless it appears to the court that the filing will not delay the orderly processes of the pending action, in which event the court may accept the petition and the filing of the petition has the same effect as the filing of any such petition within such sixty days after the service or acceptance of process."
Amend title to conform See at:

http://www.azleg.gov/legtext/49leg/2r/adopted/1199grayl445.doc.htm
As always, you can post any comment about this blog or Divorce Mediation, or just Mediation by following the directions at the right in the green column or at the bottom of this website. Learn more about mediation at http://www.center-divorce-mediation.com/ WM(172) 4/20/10

Delaying Divorce in Arizona Part 2

We continue to monitor the bill in the Arizona legislature to extend the waiting period for divorce. The Senate approved a revised version of the bill (SB1199) at the end of March. See Howard Fischer’s article in March 30, 2010 Arizona Daily Star at http://azstarnet.com/news/local/govt-and-politics/article_5030800b-1e41-51c8-a4c5-eeaed0d99115.html?mode=story This bill is an improvement of the older bill. It allows the divorce to be granted sooner if both parties agree. This works very well for mediated divorces where the parties do agree on everything. It will give divorcing couples another good reason to mediate their divorce. We will continue to keep you posted on this very important bill.
As always, you can post any comment about this blog or Divorce Mediation, or just Mediation by following the directions at the right in the green column or at the bottom of this website. Learn more about mediation at http://www.center-divorce-mediation.com/ WM(171) 4/11/10

Wedding Mediation

A mediator’s skill set can be applied to many different issues. I started out doing divorce mediation but now do marital mediation, elder mediation, community mediation, employment mediation, and housing mediation. I am always looking for new areas to mediate. After reading, Abby Ellin’s article in the April 4, 2010 New York Times entitled "Burden of Paying for Wedding Bells Shifts," I have now found a new area - Wedding Mediation. See her entire article at http://www.nytimes.com/2010/04/04/fashion/weddings/04FIELD.html
Ms Ellin indicates that
"..with these shifts in the financial landscape of weddings have come changes in the dynamics of who gets to call the shots.
According to Lizzie Post, a great-great-granddaughter of Emily Post and a spokeswoman for the etiquette institute in Burlington, Vt., that bears her ancestor’s name, "Money should never be used as a bargaining or leveraging chip." Nor does she think it is ever acceptable for one family to dictate solely what’s happening in the wedding — especially if all parties are paying. "You should get the two families together in advance and talk very respectfully and candidly about what everyone’s wishes and expectations are."...."It helps for everyone to discuss this right off the bat," she said, adding that even if the parents aren’t involved, she always requires the bridegrooms to attend planning sessions. "Sometimes you can see the guy doesn’t want to be there. And I say, ‘If you’re not involved in the meetings, you’re going to get swept up in this tornado and you’re not going to like it.’ "
Glenna Tooman, the owner of Memory Makers Event Planning in Boise, Idaho, agrees that it is better to bring all parties to the table from the start. "I encourage my brides to include the groom’s mother." She added: "Sometimes you have a person who can be very controlling. But if they have a good relationship with the groom’s mother and she is supportive of the bride, it can be a great bonding experience."
But as Ms. Goldberg pointed out, these sharing arrangements could easily evolve into competitions. "Everybody becomes a party planner when they’re throwing money around," she said. ʺ
These are issues where a mediator can be a very big help. I would be surprised if mediators are not already helping out. I can’t imagine these problems being resolved without a mediator.
Brides, grooms, and their families, we are ready when you need us!
As always, you can post any comment about this blog, Divorce Mediation, or Tucson Arizona by following the directions at the right in the green column or at the bottom of this website. Learn more about mediation at http://www.center-divorce-mediation.com/ WM(170) 4/4/10

Divorce Mediation and Domestic Violence

Periodically, my daughters send me an article they think I will be interested in. My younger daughter recently sent me an article from Slate by Mary Adkins entitled, "Breaking Up Is Hard Enough To Do Why don't courts offer mediation to victims of domestic violence getting a divorce?" You can see the entire article at http://www.slate.com/id/2246708/ Ms. Adkin’s premise is "Domestic violence brings women to court seeking protective orders ... (b)ut when women who say they've been beaten up try to end their marriages, they find themselves at a disadvantage. In family court, they probably won't be offered mediation—the cheaper, less antagonistic alternative to litigation."
Ms. Adkins makes a strong case for divorce mediation when she say, "It costs less than litigation—couples save upward of 40 percent in attorney's fees. It does not require lawyers. And it's faster, saving money for the state as well. More important, research has shown that mediation leads to less bitterness, keeping the period of conflict short, which is better for children. Research also suggests it yields better outcomes for both parties, though better in different ways—women get more property and more financial support, while men are more likely to get shared custody or more visitation time with children."
She goes on to quote Oregon's "plan and protocol" for dealing with victims which states that "when domestic violence is present among parties in a dispute, the abuser's desire to maintain power and control over the victim is inconsistent with the method and objective of mediation. Fear of the abuser may prevent the victim from asserting needs."
In essence she feels that evaluative mediation works better in cases of domestic violence than facilitative mediation. She contrasts facilative mediation where, "The mediator does not offer opinions or recommendations. His limited role, in the face of a gross power disparity, can leave victims vulnerable to bargaining away financial support, assets, even custody, all out of fear." This compares to evaluative mediation where the "mediators are more active. Trained to attend to power imbalances, they offer opinions on fairness and predict how a case will play out at trial. The mediator is charged with preventing exploitative agreements, and the statistics about satisfaction and outcome suggest they do a pretty good job. All agreements coming out of mediation are reviewed by a judge. And in cases with a history of violence, states can mandate shuttling—where the parties sit in separate rooms—rather than face-to-face meetings."
Domestic violence is always a challenging issue for mediators. Some mediators won’t mediate a case with domestic violence. We try to screen for it but I am not sure we always are made aware of it. If we do find it, we always question the party further to make sure the party feels safe and can participate in the mediation without feeling intimidated. If we decide to mediate, we will stop the mediation at anytime we feel domestic violence is effecting the process. When I did domestic violence training, I remember the instructor talking about the "look." It was classical conditioning. The spouse only had to hit the other spouse once. After that the spouse only had to give the other spouse the "look." It is like an invisible fence for dogs. In retrospect, I realize that I have been doing more evaluative mediation in divorce mediation cases where domestic violence is an issue. I believe divorce cases where there has been domestic violence can be mediated but it takes a highly skilled and trained mediator whois using the right style of mediation.
As always, you can post any comment about this blog or Divorce Mediation or Divorce by following the directions at the right in the green column or at the bottom of this website. Learn more about mediation at http://www.center-divorce-mediation.com/ WM (169) 3/14/10

Cohabiting and Divorce

Over the years I have seen many couples get married for the wrong reasons. They often think that marrying will save the relationship. They often have a child for the same reason. I was reminded of this by the article in the March 3, 2010 New York Times by Sam Roberts entitled, "
Study Finds Cohabiting Doesn’t Make a Union Last" You can read the entire article at http://www.nytimes.com/2010/03/03/us/03marry.html Mr. Roberts writes about a study done by
the National Center for Health Statistics using data from the National Survey of Family Growth conducted in 2002. He says, "Couples who live together before they get married are less likely to stay married, a new study has found. But their chances improve if they were already engaged when they began living together. The likelihood that a marriage would last for a decade or more decreased by six percentage points if the couple had cohabited first, the study found." Interestly, he goes on to report that "Half of couples who cohabit marry within three years...If both partners are college graduates, the chances improve that they will marry and that their marriage will last at least 10 years." Mr. Roberts or the study don’t say why this is the case for non college graduates but it I think it may be as I said that they are trying to fix an already broken relationship. I have also noted that marriage may change a relationship. I knew a couple where the woman was in control when they were living together and the man was in control when they got married. I also know that people often behave one way in order to get married and then behave differently when they do get married. This is another reason why I strongly advocate premarital counseling and a more wide spread process for letting divorcing non married couples. What are your experiences? Share them with us and perhaps help a couple from making the wrong decision. One last comment, the article also notes that in general one in five marriages will dissolve within five years. On in three will last less than ten years.
As always, you can post any comment about this blog, Divorce Mediation, or Tucson Arizona by following the directions at the right in the green column or at the bottom of this website. Learn more about mediation at http://www.center-divorce-mediation.com/ WM(168) 3/3/10