For many of you who regularly read the Equitable Mediation Services blog, you’ve seen me write about the many benefits of mediation including a less stressful and more humane process, significant cost savings of $20,000 or more and better results for you and your children and now it seems that the Supreme Court of New Jersey agrees with my assessment.

In a landmark ruling, the Supreme Court has ruled that issues of child custody can be decided directly with the help of a New Jersey mediator and that parents who disagree on their parenting plan or child custody issues can circumvent the courts and go directly to mediation to resolve the issues surrounding the physical and legal custody of their children.  This is a tremendous development in that it puts even more power in the hands of divorcing couples to control the outcome of their divorce because after all, it is both of you and your children who have to live with the result.  Not the courts, not the judge and certainly not your attorney.  Instead of taking each other to court to fight over your children and spend tens of thousands of dollars in the process (which by the way would be better spent on their college education or family vacations) you can go directly to mediation without having spend countless hours in court, waiting, arguing and worst of all, spend all that money on both of your attorneys to probably just sit there with you in the hallway while it’s your turn in court.

When you work with a mediation service to resolve your child custody issues, you collaborate instead of litigate, you reduce the number of professionals involved in the discussions from two to one and in turn, greatly reduce the cost.  Best of all, you control the outcome.  You see mediation allows for creative solutions that a cookie cutter court approach may not allow for.  Attorneys are trained as advocates and they will represent whatever position you want them to but are they really going to pull you aside and tell you they don’t agree with your approach?  Are they really trained in coming up with creative solutions to your parenting plan issues or child custody issues or are they trained to argue the law and try to win on your behalf no matter what the financial or emotional cost?.  Let’s face it: going to court is a destructive process and one not in the best interest of anyone, especially the children.

Mediation on the other hand is collaborative.  We work together instead of fighting against each other.  We keep the conversations focused squarely on your children and not on what a bad parent the other person is.  We recognize that you both have rights as parents because after all you are mom and dad and the more time the children spend with each of you, the better of they will be. Facing up to the fact that you are the adults and your children need you to act like it is a difficult message to get across when you’re in open court with the public watching your battle in plain view, your attorneys yelling at each other and you sitting on opposite sides of the room.  Imagine if your kids saw all that, would they really think you love them or would they think “I could be spending time with my parents instead of sitting here watching them scream at each other.”

Is that really how you’d want your children to think about you?  Think about it and let me know.

If you have any questions about divorce mediation or how mediation can benefit you, please feel free to contact us to schedule a free, no-obligation consultation in one of our six central New Jersey office locations where we will take some time to get to know more about you and your situation and see if mediation is right for you.  Of if you’re simply not ready yet, feel free to visit the Equitable Mediation Services website where you’ll find lots of great information about parenting plans, equitable distribution, NJ child support and spousal support / alimony and contact us when you’re ready.  We look forward to helping you get through your divorce peacefully, efficiently and with as little stress on you and your family as possible.

For those of you contemplating a divorce in New Jersey, you will want to learn more about the equitable distribution of marital assets and liabilities and how this will impact your settlement. We at Equitable Mediation Services follow a three step process in order to help divorcing couples come to an agreement on equitable distribution but be warned: it’s not as simple as just three steps.  There are many factors to consider including:

• Goals: short term or long term?
• Liquidity: do you need cash now or can you wait for a bit to get it?
• Taxes: are the assets you are receiving taxable or non-taxable?

For today’s post, let’s look a little bit at the taxable effect of equitable distribution during a divorce.  For the most part (insert strong legal disclaimer here) I can tell you as a divorce mediator in New Jersey, the distribution of assets which occur due to a divorce action are tax-free; i.e. assets can be transferred from one spouse to another without either of them paying any taxes or penalties.  But (and here’s the important part) once one of you goes to sell or convert those assets after they have been transferred, there may be taxes, and rather substantial ones, on the sale or transfer of that asset so it’s important that you have a good hard look at just exactly what you are getting in your memorandum of understanding and final property settlement agreement.

Take for example the marital home.  Seems like a good idea to keep the house, right?  Consider this: as a married couple, you are entitled to a $500,000 capital gains tax exemption under current tax law.  But if you buy the house out on your own and then go to sell it down the road when you are a single person, you will only get a $250,000 capital gains exemption under current tax law.  This could result in a significant tax hit should you make more than $250,000 on the sale of your home so it’s important you save those receipts from all those projects you did around the house and consult with your accountant to determine strategies that may save you money in the long run.

What about brokerage accounts?  Let’s say you have the choice of a savings account worth $5,000 or $5,000 worth of stock in Google.  Which one would you take given they were worth the same amount of money?  Even if you take it as a part of your property settlement and sell it right away, there may already be gains built into it from when you first bought it.  You may wind up paying taxes on something that did not escalate in value while you owned it alone.  That savings account comes to you tax free since there is no “capital gain” and you would only pay taxes on any interest you earned after you took possession of the account.  And depending on your particular goal, a savings account is liquid and can be used to do anything you want so it’s important to consider your goals as we listed above.  Having a divorce mediator with a masters degree in Finance like I do can certainly come in handy in situations like these as I am acutely aware of the taxable effect of assets and can provide you with the most accurate information to help you make an informed decisions.  And really, isn’t that what mediation is all about anyway?  You controlling your future and getting the settlement that works for both of you?

While this is meant to show a simple example, I encourage you to speak with an accountant or financial planner who can better assist you while going through your divorce and help you make wise equitable distribution decisions.  But if you have any questions about divorce mediation or how mediation can benefit you, please feel free to contact us to schedule a free, no-obligation consultation in one of our six central New Jersey office locations where we will take some time to get to know more about each of you and your situation and see if mediation is right for you.  Of if you’re simply not ready yet, feel free to visit the Equitable Mediation Services website where you’ll find lots of great information about parenting plans, equitable distribution, NJ child support and spousal support / alimony and contact us when you’re ready.  We look forward to helping you get through your divorce peacefully, efficiently and with as little stress on you and your family as possible.

If you’re like most of the couples we see at Equitable Mediation Services, your single biggest asset is your house and especially if you have children, the decision on whether or not to keep it is a big one.  In today’s post, we’ll take a look at some important conversations you should have with your mediator (and yourself) when determining if you should keep the house or not.

The image of home conjures up lots of great memories of holidays, birthdays, family time and the safety and security that owning a home can bring.  But on top of all of that, home ownership can also bring problems including busted pipes at 2 in the morning, leaky roofs, high property taxes and the never ending stream of projects that only seems to grow longer as the seasons unfold.  Let’s face it: maintaining a house is a lot of work.  So should you really fight to keep the house when going through a divorce?  As a New Jersey divorce mediator, you already know that I can’t tell you what to do but I can tell you some things your should consider to help you make an informed and fact-based decision.  It has been my experience as a divorce mediator in NJ that many of the individuals who end up fighting for the marital home aren’t doing it to improve their share of the equitable distribution but rather for emotional reasons which may be hard to quantify now but may cause financial hardship down the road.

If you’ve been paying attention to the news as of late (and who hasn’t given that the message seems to be loud and clear – we’re in a financial meltdown!) you know that many Americans have not been living within their means, spending more than they make and thinking the endless stream of credit and happy times will last forever.  Well my friends, the brakes have been firmly applied and the party is truly over.  But that doesn’t mean that all hope is lost but rather than we need to return to good old fashioned tried and true things that work like budgeting and saving.  Imagine that – budgeting to see if we can actually live on what we make.

Houses are expensive and they cost a lot more than the mortgage payment.  I know you really want to keep the house but ask yourself this one question:  “can I really afford to keep the house up in the manner of which I am accustomed to living?”  We’ve all heard the stories about people who buy these large McMansions in the burbs only to leave them empty inside as they can’t afford furniture.  Can you afford furniture?  Then you’re probably better off than most folks but what if something goes wrong?  Will you be able to fix it?  To answer that I say: do a budget.

In a recent article I read, the author kept track of her “additional expenses” she incurred over a four year-period of owning a modest home in the mid-west.  She put the average additional cost of owning this home over a four year period at around $47,800 which equates to roughly $12,000 per year so basically on top of your monthly mortgage payment expect to pay about another $1000 per month. Where does that go you ask?  How about:

1. Property Taxes – subject to the whim of your local government, naturally.
2. Utilities - look at the recent spike in gas and oil prices and see what it did to your bill.
3. Lawn Care - even if you cut your own grass and put down your own fertilizer, that stuff is expensive!
4. Snow Removal – one good blizzard or two and you’ll be putting away your shovel for good and either hiring someone or buying a snow blower.
5. Pest Control – termites don’t care if you can afford to get rid of them or not.
6. Appliance Replacement & Repair – with everything electronic today, expect repairs to cost much more than they used to.
7. Home Maintenance & Improvements – painting, carpeting, new sheets, towels, replacing broken glasses, etc. because we all know kids do some serious damage!
8. Capital Repairs – new roof, new hot water heater, etc.

If you’re living from check to check and one of the major expenses pops up, what will you do?  Live without hot water until you can afford to fix it? Not exactly the best for your mental health or the health of your children should they be living with you at the time.  Don’t underestimate the stress and strain of not being able to afford to live can bring so ask yourself again: “can I really afford to keep the house up in the manner of which I am accustomed to living?” If you accurately budget the items above based on your particular situation, then you will have a much better chance at answering this question.

So what if after you do the budget the answer comes back and it’s no, you cannot afford to keep the house?  Let me be the first to tell you a secret: that’s OK!  Let me assuage you of the guilt that not being able to keep your children in the house they grew up in brings as kids are resilient (I’m a child of divorce so I know of what I write) and they will survive.  To them, mom and dad are home, not the four walls that surround them.  And if you’re so busy working three jobs to pay for the house you can’t afford and stressing out over all the projects you’ll have to do yourself since you can’t afford to pay someone to do them, then what kind of time will you spend with your children? How will they live or know that they are loved and you really do want to spend time with them if you’re too busy with the house?  So what do you do? Repeat after me: do a budget!

Now that you’ve taken a serious look at your housing expenses and all other expenses that you will incur post-divorce and you now have a good idea of what your income stream and payments will look like through employment, child support and perhaps spousal support, you will have a much better idea of how much you can afford for housing.  With today’s market being what it is, you will be surprised at what you might be able to afford as it may have been out of reach just a few short years ago so don’t give up hope of owning a home just yet, just be open to the idea that it may not be the home you lived your married life in.

Then again, a fresh start isn’t necessarily a bad thing.

If you have any questions about divorce mediation or how mediation can benefit you, please feel free to contact us to schedule a free, no-obligation consultation in one of our six central New Jersey office locations where we will take some time to get to know more about you and your situation and see if mediation is right for you.  Of if you’re simply not ready yet, feel free to visit the Equitable Mediation Services website where you’ll find lots of great information about parenting plans, equitable distribution, NJ child support and spousal support / alimony and contact us when you’re ready.  We look forward to helping you get through your divorce peacefully, efficiently and with as little stress on you and your family as possible.