Posted on October 30, 2009 by Steve Eversole

Birmingham Divorce Update: Discussing Money Matters can make a Marriage More Secure

The causes for divorce are many, but one of the primary reasons couples in Alabama get divorced is due to issues surrounding money. Whether it’s poor financial planning, excessive spending by one or both spouses or simply constant disagreement over household financial priorities, money can be the bane of a marital relationship. A surprisingly large percentage of people who become legally separated, as well as those who actually go through divorce, will tell you that money was the culprit.

As a Birmingham family law and divorce attorney, I’ll add that it’s not just money, but the lack of communication about money that trips people up. A good marriage thrives on communication. Lack of communication hardly ever helps a relationship survive and often leads to divorce.

A recent New York Times article addressed this subject. There are several things to keep in mind when approaching the subject of household finances. Whether you’re living together and planning to get married, or married already, these pointers may make the difference in whether or not your future together will be relatively smooth going or rocky from the start.

Money: Topics of Conversation

  1. Explore with your partner each other’s background as it applies to financial education. Did your parents teach you about money and personal finances? And what is your “financial philosophy”?
  2. Talk about credit. Does each person know his or her credit score? Be honest about why your score may be low or how it could be improved. How can your credit scores and credit history affect your future as a married couple? Will they affect your goals?
  3. Discuss who will take the lead in handling the family finances. Who handles it now? And who will decide how much each person can spend in order to maintain a positive cash flow for the family?
  4. Talk about where you want to be financially in five years. Where do you want to be in 10 or 20 years? And what are your individual goals for retirement?

Marital Finances: For Richer, For Poorer
It’s hard to get through modern life these days without money, but when two people commit legally to each other, as with a marriage, each other’s finances become tied together, legally. A couple looking toward marriage should consider how the future combining of that pool of savings, income and finances will affect their life together. It can make for a smooth transition to a happy and growing marital relationship.

As a divorce lawyer in Alabama, I’ve seen the result of poor financial planning and bad money management and how these can negatively impact a marriage. Love may be the reason you got together, but money can be your undoing. My advice is to be open and talk about each other’s wants and needs. You may find that it’s liberating and takes the guesswork out of planning for your happy future together.

 

Money Talks to Have Before Marriage, NYTimes.com, October 23, 2009

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Posted on July 31, 2009 by Steve Eversole

Divorce and Bankruptcy in Alabama: The View from a Birmingham Lawyer's Perspective

These days it’s not hard to find families in distress. Divorce and separation loom large as people face a variety of stress factors that make for a daunting day-to-day existence for many married couples. Along with all the other challenges of married life, the current world economic situation has created more difficulties. From Birmingham and Huntsville to Montgomery and Mobile, we can all see it. As an Alabama divorce lawyer and family law attorney, I hear on a daily basis the hardships taken on by many married couples around our state.

Anybody who has ever been married knows that trouble with the family finances can easily trigger marital discord. In fact, financial stress is one of the most common factors leading to divorce. The past couple years have been extremely difficult, even for the most well-adjusted couples. Everyone is feeling the pressure and uncertainty of the global economy.

Some things cannot be controlled, but one point to keep in mind is that when family problems lead to divorce, it can be very tough on a person's finances. Of course, divorce itself can add to your costs, such as legal fees, a possible second residence and sometimes shared custody or support orders.

This is a lot to consider, especially if you are already in debt. Any additional financial obligations can quickly become overwhelming. With constant calls from creditors, some people begin to feel trapped to the point of filing for bankruptcy. But bankruptcy can also greatly impact certain aspects of your divorce.

For instance, which proceeding you file first can change what you own and owe under the law. Following a divorce, the language used in the divorce decree can even determine whether spouses' debts to one another are wiped out by the bankruptcy. If you're considering a bankruptcy during or after divorce, or if your former spouse is considering it, you must speak with a qualified family law attorney. I cannot stress this enough.

In a nutshell, most people have two options open to them. In a Chapter 7, or liquidation, bankruptcy, a person sells all of his or her assets they can in order to pay off your creditors. Any remaining bills are then forgiven. In a Chapter 13, or restructuring, bankruptcy, a person chooses to keep their assets while making a plan to gradually repay their creditors over a three- to five-year period.

In general, Chapter 13 is better for people who need to protect a large asset like a home, but who also have a steady income. Chapter 7, on the other hand, is generally available only to folks with smaller debts and fewer assets. One of the most important aspects of bankruptcy for most people is that it gives you an automatic and immediate stay -- a legal document telling your creditors to ease off.

One additional point, in the case of completed divorces, you must remember that bankruptcy NEVER eliminates child support or alimony obligations, nor does it affect any legal judgments obligating you to pay attorneys' fees. However, debts owed by one spouse to the other as part of the divorce's property settlement may be eliminated under certain circumstances. The wording is critical, which is why you need an experienced divorce attorney to help protect your assets.
 
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Posted on June 5, 2009 by Steve Eversole

Post Divorce in Alabama: Some Financial Mistakes to Avoid

Going through a divorce in Alabama is hard enough, but picking up the pieces and getting on with your life afterward can be a major challenge as well. One thing that can’t be ignored are your finances. This can be a big hurdle, because usually one or the other spouse was the “accountant” in the relationship. Still, even savvy domestic money manages can use some advice.

Working here in Birmingham as a family law and divorce attorney, I am frequently asked by clients what their strategy should be regarding the financial side of a divorce settlement. Knowing your money situation and other household finances is a big part of this. Also, understanding the tax implications of certain payments will make your life that much easier in the long run. Below are some typical mistakes that people going through divorce tend to make.

Number One: Hanging on to the house at all costs
This is not necessarily the best option. According to financial experts, more attention should be given to which person can afford to maintain the property -- including paying the mortgage and managing the taxes. However, don’t think that getting spousal support to help with the mortgage payments will keep you on easy street. Large unexpected costs, such as a new furnace or other large-scale maintenance usually happen sometime or another, which can make home ownership more of a burden and les of a luxury.

Number Two: Failing to make a clean financial break with your ex-spouse
Cleanly separating each of your debts and assets, especially if you have been married for a long time, can be a difficult task, but a very necessary one. Most any financial counselor will tell you this is absolutely necessary, and the consequences of not doing so can be devastating. It may seem overwhelming, but the alternative is many times worse. You don’t want to have your ex racking up debt and ruining your personal credit score.

Number Three: Counting on your ex to comply with his financial obligations
While both parties in a divorce are beholden to the court-ordered divorce agreement, creditors do not fall under that arrangement. If your ex is supposed to pay the mortgage but fails to do so, the lender is apt to sue you both. And any missed payments or a default on a mortgage will hurt you next time you apply for a loan.

Number Four: Not reviewing your estate plan following your divorce
Wills and trusts can both be seriously impacted by divorce proceedings. If a divorced spouse waits too long to change the beneficiary on a will or life insurance policy, the money could end up going to the wrong person, and your new spouse may get nothing. It seems incredible, but there have been instances where an ex-spouse inherits money from a former wife or husband.

Number Five: Not understanding the different tax treatments for alimony and child support
As a last note, you should always be aware of which amount of money in your divorce settlement goes for alimony, and which goes for child support. Whereas child support payments are exempt from tax by the recipient, alimony payments are taxable. Also, remember that there are limits to how long a person can receive these payments. For instance, child support payments can no longer be received once the child turns 18 years of age, or is finished with college, and spousal support typically ceases once that person gets remarried.
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