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During conversations about equitable distribution you and your spouse will be asked to provide a complete list of discovery items which include common financial items which show up regularly like tax returns, pay stubs, bank balances and credit card balances but there are some other documents you’ll need which may only be issued quarterly or annually so now it a perfect time to be on the lookout for them. Much like how employers are required to send you your annual W-2 form showing your earnings for the previous year by the end of January, investment houses are required to do the same. Some pension plans such as plans for firemen, police officers and teachers may also only offer an annual statement so now more than ever, it’s critical you keep an eye out for these items so that when the time comes to talk equitable distribution you’ll be informed and can have an intelligent conversation.

Items to be on the lookout for when contemplating a divorce include:

• W-2′s
• Year end Credit card statements – most companies can issue you a report that shows spending by category which is helpful for budgeting later on.
• Year end Investment / brokerage statements  – showing all transactions made over the course of the year so you’ll notice if there were any major sales of assets that you were unaware of.
• Year-end mortgage interest and escrow statements – shows interest paid, taxes (usually) and the balance on your mortgage.

You may also wish to do a few valuations of major assets you own such as cars and your house to get a rough idea of what those are worth as well.  Sites like Zillow for real estate valuation and Kelley Blue Book for automobile evaluation can help you more fully understand what your home or car might be worth when it comes time to talk equitable distribution. Like the old saying goes “information is power” and by taking these simple steps now,  if you’re contemplating a divorce you can be better informed when it comes time to talk equitable distribution and get a fairer settlement.

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 Joseph Dillon is a NJ divorce mediator and Managing Partner of Equitable Mediation Services – a New Jersey based firm that provides divorce mediation to clients throughout New Jersey and divorce coaching services to clients throughout the United States.  Mr. Dillon may be reached at (908) 864-2177.

Managing Partner and Equitable Mediation founder Joseph Dillon said “I know I speak for everyone here at Equitable Mediation when I say that we’re pleased to be able to assist divorce mediation clients in an office location that’s convenient for them during their time of need and by expanding into Paramus, Saddle Book and Hackensack, we’re able to do just that for Bergen County couples.”

Until recently Equitable Mediation Services focused mostly on Central NJ and the lower part of Northern NJ with office locations in Bedminster, Bridgewater, East Brunswick, Iselin (Metropark), Morristown Princeton, Short Hills, Red Bank and Roseland.  With the expansion into Bergen County and the towns of Paramus, Saddle Book and Hackensack, clients in those areas will still be able to obtain the benefits of mediation in NJ but in a location that’s much closer to their home.  This is especially convenient for those individuals who may live in New Jersey but work in New York City which many Bergen County resident do.

“Our clients come to us from all over the state and up until recently, for those individuals who phoned us seeking mediation services in Paramus, Saddle Book or Hackensack, the best we could do was offer them a meeting in one of our other office locations which for some, wasn’t convenient.  Having these three new office locations is going to make it easier on our clients in Bergen County to get the services they need from a firm they can trust.  We’ve been mediating for a long time and divorce mediation is our full time profession.  Using an unknown firm without Accredited Professional Mediators just isn’t something clients should want to take a chance on.”

Because the laws of the State apply to all clients who are eligible to file for divorce in New Jersey,  Equitable Mediation Services is able to service clients no matter where they live.  Adding three new Bergen County office locations is in line with the Equitable Mediation philosophy of reducing the stress of an already uncomfortable situation by being where the clients need divorce mediation services the most. For information on the new Equitable Mediation Services office locations, please see the addresses below.

• Paramus Divorce Mediation: 140 East Ridgewood Avenue – Paramus, New Jersey
• Saddle Brook Divorce Mediation: (the Park 80 West building)- 250 Pehle Avenue, Suite 200 – Saddle Brook, New Jersey
• Hackensack Divorce Mediation (opening winter 2012) – 401 Hackensack Avenue – Suite 200 – Hackensack, New Jersey

If you have any questions about divorce mediation in NJ or our services, please call us at (908) 864-2177.

First you’ll want to keep in mind whether an asset is a taxable or non-taxable item.  For example, if you were to receive $1000 in stocks versus $1000 in cash during your Equitable Distribution, which would you take?  On the surface they seem like the same thing but in reality, tax issues may make the stocks higher or lower in value than the $1000 they are currently worth.  Not only that, stocks fluctuate in value whereas cash sits in a bank and doesn’t drop below it’s value unless you withdraw some.   Same thing goes for IRA’s & 401(k)’s.  In this case, plan on knocking off at least 20-25% of the account’s current value as unless it’s a Roth IRA, you’ll pay tax on the money when you go to take it out come retirement.

Second is the house.  You know the old saying about what goes up must come down?  Sadly many of us in NJ found out it also applies to housing prices. Houses are not only risky investments, they require a lot of work.  For example, the average life of a water heater is 10 years.  HVAC unit maybe 15-20 and a roof can vary depending on quality and grade.  So if you plan on being in a home for an extended period of time, be real and consider the replacement and maintenance costs associated with home ownership, not just the monthly mortgage payment.  Losses from hurricanes or other disasters can be costly as well and given the weather lately, seems like you can count on one of those events every 5-10 years.

Finally talk to your accountant (or get one if you don’t have one) about what your Equitable Distribution settlement will look like vis a vis your tax return.  Many of the decisions you make in mediation will have a significant impact on your taxes so it’s important you understand those implications to make sure your Equitable Distribution is well, fair and equitable.  When you’re sitting at the bargaining table it may not always be evident what the impact may be so reserve the right to say “I need some time to consult with my accountant to understand if this is in my best interest” before proceeding.  With divorce mediation there is no rush and it’s important you feel comfortable before moving forward.

Have questions about Equitable Distribution?  Please feel free to visit the Equitable Mediation Services website or give our offices a call at (908) 864-2177 and schedule an appointment for you and your spouse to come in a discuss your unique situation as we’re always glad to help.

It’s no secret that divorce mediation is a much more efficient and much less expensive process as opposed to a lawyer-driven collaborative divorce or litigated divorce as the parties are doing much of the work themselves saving tens if not hundreds of thousands of dollars in the process (sad but true). But part of the reason divorce mediation in New Jersey also costs much less is that it is an efficient divorce.  With the help of your NJ divorce mediator, you and your spouse will move through all of the equitable distribution issues surrounding your divorce in an efficient and organized fashion allowing you both to make better decisions in less time than if you involved attorneys.  By moving through your mediation in as little as two sessions for couples without children and four session for couples with children, how much the market is up or down will impact you much less than if it took two to three years like an attorney driven divorce does.  I’m not saying the market will be perfectly stable for a month long period but imagine if you had to wait two to three years to settle.  I’m guessing there is a much better chance the market will have gone up or down in two to three years as opposed to one to two months.  Account values change and “go stale” so I remind my clients that while I’m not here to rush you through the process, I am here to remind you that in order to remain efficient and not have to revisit equitable distribution decisions a year down the road, it’s in everyone’s best interest to make things move forward as smoothly as possible and divorce mediation is just the way to do that.

If you or your spouse has any questions about equitable distribution or how divorce mediation can benefit you, please call the offices of Joseph Dillon at (908) 864-2177 and we’d be happy to schedule an appointment for you and your spouse to come in for an initial meeting in one of our many convenient New Jersey office locations.  Or if you’re not ready yet, please feel free to visit the Equitable Mediation Services website where you’ll find lots of great information about equitable distribution, divorce mediation and more.

As a New Jersey divorce mediator it’s my job to help couples resolve all the issues surrounding their divorce and the equitable distribution of marital assets and liabilities is one of those responsibilities.   I do get clients who think that divorce mediation is a gateway that they can pass through and all of their debts will be forgiven but that’s not how it works.  Even after your divorce mediation your creditors will still want their money.  So what can you do?

1. Liquidate other assets to pay off your debt – while not ideal, you can pay the taxes and penalties on your 401k and take that money to pay off your credit cards or mortgage.  A better option is to see if you can take a loan from your 401k as in that case, you’ll be paying yourself back with interest.   You might also have to make some tough decisions on items of personal property you may wish or need to sell such as that motorboat and trailer you bought a few years back or that recreational vehicle.
2. Transfer your share of the debt to a credit card in just your name only – again, not perfect but at least in this case you’re taking your share of the debt and making a clean break once you are divorced.  You’ll be in control of how it gets paid and when you pay it off.
3. Agree to pay debts off jointly after you’re divorced – probably the least preferable option as it’s been my experience that the banks don’t care if you were each supposed to pay half.  If your name is on that credit card and the ex doesn’t pay their share, guess who the banks are going to be looking at?  You.

Ideally you should try to clear the slate once you’re divorced even if it means taking personal loans or getting loans from friends and family members as I’m figuring the reason you got divorced in the first place was to sever ties with your now ex-spouse, not to be indebted with them for the next 10 years.  No matter which route you go, it’s best to work with a New Jersey divorce mediator with a thorough understanding of financial matters like myself who can help guide you and your spouse to a fair and equitable distribution of your marital assets and liabilities.

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Joseph Dillon is an Accredited Professional Divorce Mediator in NJ and Managing Partner of Equitable Mediation Services a New Jersey divorce mediation practice with offices in: Morristown, Roseland (Livingston), Short Hills, Iselin (Metropark), Bedminster, Bridgewater, East Brunswick, Red Bank and Princeton.  Mr. Dillon may be reached by calling (908) 864-2177.

There are 4 things to consider when deciding to keep or sell the house:

1. Can you afford it? I mean really afford it?  A common mistake I see is people doing all kinds of magical math to convince themselves that they can keep the house.  The fact is these just aren’t realistic ways to purchase a home as certainly there will be other expenses that crop up that you won’t be prepared for.  Put together a realistic budget and make sure that you have enough money to not only afford the house but to buy groceries, save for retirement etc.
2. What condition is the home in? A new roof, driveway or other major repair can cost $5,000 or more.  Similarly, think about the basic upkeep.  How much does it cost to have the grass cut, leaves raked or snow plowed?  Walk through your home and take note of how old the boiler is, the HVAC unit, the major appliances, the driveway and the roof.  Figure out the cost to fix and / or repair each of those items over the period of time you intend to reside in the house.
3. Will you have time to parent? If you are going to cut the grass, rake the leaves and shovel the driveway yourself, how much time will it now take given there’s only one of you out there when there used to be two?  Will you fall into the trap of working on the house every free moment you have instead of spending time with your children?
4. Have you asked your kids if they want to stay? I hear this all the time: I want to keep the house for my children.  Your children would rather have a genuine connection with you and not spend their time looking out the window at you as you try to dig up a dead evergreen bush while they sit inside and wait for attention.  If they’re old enough ask them how they feel about moving.  Yes change is scary but if done right, the transition can be less painful than you think.

If you have questions about this article or divorce mediation in New Jersey, please feel free to call me, Joseph Dillon at (908) 864-2177 and I’ll be glad to help.

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The process of obtaining a new mortgage can be challenging and couples involved in a divorce and mediation process face some additional issues that can make the process seem even more daunting.  However, an upfront conversation with an experienced Loan Officer can make the difference between a smooth transaction and a difficult one.  It is a common misconception that getting a mortgage today is nearly impossible.  To the contrary, Mortgage companies, Banks and Insurance companies are very much interested in increasing the volume of high quality mortgages they provide to consumers.  Unfortunately, the definition of “high quality” has many different interpretations and this can create a great deal of confusion for all parties.

The basic definition of a high quality loan is one in which the borrower has a good credit score (680 or higher), sufficient income can be verified to support the mortgage payment, job stability (2 years or more at the current job), sufficient liquid assets in reserve (equivalent to at least 2 months mortgage payments) and at least 20% equity in the subject property. All is not lost if some of these criteria are not met.  For instance, credit scores can be slightly lower if some of the other factors are stronger.

When a couple is involved in a divorce and mediation process there are additional issues that need to be analyzed as part of the lending decision.  These include alimony and child support payments and sharing the equity in the dwelling – also known as an Equity buyout.  An Equity buyout occurs when the new mortgage is increased over the amount of the old mortgage and the difference is paid to the spouse that is leaving the home.  Another consideration is that both spouses are going to experience a major change in their household income.  In a family where one spouse works and the other is at home with the children, alimony and child support payments will not equal the income from the former spouse.  If one spouse desires to stay in the home the mortgage will still need to be paid but with less income.  In many cases the payment actually goes up because the Equity buyout increases the mortgage balance used to settle with the former spouse.

1 of 2 scenarios generally occurs relating to the marital home when couples divorce:

1. Both spouses wish to move out of the dwelling.  The home is sold and the mortgage is paid off.  Each spouse then seeks a new home.  If one of the spouses is obligated for alimony and child support payments it will put pressure on the ability to qualify for a new mortgage.
2. Spouse A wishes to remain in the home and Spouse B will move out.  Spouse A needs to refinance solely to remove Spouse B from any debt obligation relating to the mortgage.  Spouse A takes title to the property as a “single person”.

Scenario 2 is the more common situation. Spouse A will need to be able to verify the items listed in paragraph 2 above in order to obtain the loan approval.  An appraisal is done to determine market value and the maximum loan amount is based on 80% of the value (some exceptions for higher amounts are available).  The alimony and child support paid by Spouse B to Spouse A can be used as qualifying income once it has been received for at least 3 months and as long as it will continue for 3 years.  Once qualifying income has been determined Spouse A will generally qualify for a new loan of approximately 3 times the verifiable income.  $100,000 in income would be required for a new mortgage of $300,000.  Factors such as credit score, taxes and other liabilities can significantly affect this equation.

Spouse B now needs a place to live.  If they wish to purchase a home and get a mortgage, they will need to qualify carrying the alimony and child support payments in their debt ratios.  The debt ratio is the total monthly liabilities of the borrower as a percentage of their qualifying income.  For example, monthly income of $9000 and monthly liabilities of $3000 (includes principal, interest, taxes, homeowners insurance, condo fees, auto loans/leases, student loans, credit cards, alimony and child support) would yield a debt ratio of 33%.  The maximum debt ratio in most cases is 45%.

Early on in the divorce mediation process is the best time to discuss your situation with an experienced, licensed Loan Officer.  Your NJ divorce mediator has probably worked with a lender that is knowledgeable and they can provide you with a trusted contact.  During this conversation your Loan Officer should be able to prequalify you without charging a fee.  You would be well served to provide 2 years tax returns and current paystubs at this time so the Loan Officer has factual data to use for the prequalification.  By following these steps you will help minimize the headaches in what is already a stressful time.

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Stephen Thompson began his career in the mortgage business in 1988 and as he enters his 3rd decade in the industry he continues to enjoy serving his clients and referral partners through his association with Superior Mortgage Corp of Lambertville, NJ. Prior to joining Superior, Mr. Thompson managed the Princeton Branch of Arlington Capital Mortgage for 15 years. During that time he supervised a staff of 15 loan officers and production assistants. He worked closely with staff members to coordinate all aspects of the mortgage process as well as provide training and trouble shooting expertise.

Previous employment included Loan Officer positions with PNC Mortgage, Chase Manhattan and Citicorp Mortgage where he received multiple sales awards. Mr. Thompson is a licensed Mortgage Banker with the States of NJ, NY and PA. He received his BA in Management/Economics from Ithaca College, Ithaca, NY. Mr. Thompson is a member of the Board of Directors of Advancing Opportunities, formerly known as Cerebral Palsy of NJ. He has been an active volunteer with the charity for more than 12 years. Mr. Thompson works with clients of Equitable Mediation Services to better assist them through the home refinancing and mortgage process as per the terms of their equitable distribution settlement. Additional information about Mr. Thompson can be found by visiting his website or by calling him at 609-577-1474.

Given the pension is in pay status, we already know what your monthly benefit is going to be so unlike pensions that are treated as marital assets subject to equitable distribution, their present value is a moot point.   Instead we need to prepare a comprehensive budget for each of you given that you’re now retired.  I’m going to assume if you have any income coming in is small at best and you probably aren’t socking away a ton of money in a 401(k) or IRA.

In this budget, you’ll estimate expenses in three main areas for your current marital lifestyle and your future individual lifestyle:

1. Housing costs – mortgages, taxes, utilities, repairs, etc.
2. Transportation costs -  car payments or leases, repairs, gasoline, insurance, registration, etc.
3. Personal costs – groceries, clothing, entertainment, vacations and the item I most often see undervalued – health care costs.

Once you’ve determined your monthly expenses, take a look at your monthly income from all sources:

1. Social Security
2. Your pension
3. Drawdown of other investments / savings accounts you may posses or will receive as part of your equitable distribution.

Now it becomes a simple matter of does income exceed or fall short of expenses?  Many people are surprised to find out that it is more expensive to run two households than one so while the budget exercise may seem unnecessary, I require all of my clients to prepare one so they may see for themselves how expensive it is to live on your own.

The last step is to compare your post-marital lifestyle to that of your soon to be ex-spouses’ lifestyle.  Are they comparable?  Do you have roughly equivalent expenses and income streams or is one of you is going to fall short each month or draw down your retirement savings at an accelerated rate thus leaving you with a potential shortfall at the end of your life? Remember – the marital lifestyle is the yardstick by which spousal support / alimony arrangements are judged so as angry as you might be about your divorce, spousal support / alimony is not meant to use as a weapon but rather a way of making each parties’ post-marital lifestyle a bit more equal.

Certainly the subject of dividing pensions in NJ divorce mediation is a complex one and it would be impossible to cover all the necessary issues in two blog posts but hopefully I gave you a bit of insight about what your options might be.  Should you have any questions about NJ divorce mediation, please feel free to give me, Joseph Dillon, a call at (908) 864-2177 and I’d be happy meet with you and your spouse to discuss how NJ divorce mediation can benefit you.