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Englewood Cliffs Legal Blog

Valuing a business during a divorce

Property division negotiations sometimes become contentious when New Jersey couples file for divorce, and this can be especially true when a family business is one of the assets being discussed. Such commercial ventures are often run by one of the spouses involved, and non-operating spouses frequently believe that the business is far more profitable than it actually is. Thorny matters generally include the value of the enterprise and how much income it generates each month.

One way of dealing with these issues is to call upon professionals with experience in this area. Certified public accountants who are Accredited in Business Valuation by the American Institute of Certified Public Accountants or who are Certified Valuation Analysts may provide an expert opinion, but finding one that both spouses agree on can be a challenge as only about one in a hundred CPAs have completed the specialized training required to earn these qualifications. However, searching for a qualified accountant could be important as courts might not accept business valuations provided by unaccredited CPAs.

Divorce and selling a home

New Jersey couples who are getting a divorce might need to sell their home. This happens in almost two-thirds of divorce cases. It is not always possible for one spouse to buy out the other. There are several things couples can do to make this process go more smoothly despite the emotional difficulties that accompany it.

First, they should talk to an agent about responsibilities and goals. Following this initial discussion, it is better to appoint one spouse to communicate with the agent and back to the other spouse. The couple should also avoid involving the agent in any personal conflict.

Social Security and divorce

When New Jersey couples get a divorce, if they have been married for at least 10 years, one person might be able to draw on the other person's earnings record for Social Security payments after retirement. The payments can actually start when the people are 62 although the benefits will be higher if they wait until the full retirement age of 67.

There are several other requirements that must be in place. The divorce must have been finalized at least two years before applying for benefits. The person must be single although if there was a remarriage that ended in annulment, death or divorce, it might still be possible to draw on a previous spouse's benefits. The other former spouse must also be at least 62. His or her benefits will not be affected in any way.

Dividing IRAs during divorce requires special attention

People in New Jersey facing the end of their marriages are already dealing with the emotional and psychological fallout of divorce. Of course, another aspect of divorce is also the financial aspect: dividing assets and debts and dealing with the distribution of various types of property. From real estate to retirement savings, all kinds of financial assets and investments are subject to property division during divorce.

In many cases, the most important or largest asset to be divided between the spouses is a retirement plan. For some, this savings takes the form of a defined benefit plan or a 401(k) plan, designated as a Qualified Plan. This means that these can be divided using a Qualified Domestic Relations Order, or QDRO. A QDRO allows these plans to be divided during divorce tax-free and without the 10-percent penalty for early withdrawals usually applied to such plans.

Retirement can face an impact from divorce

The end of a marriage can be an emotionally and logistically difficult time for spouses in New Jersey. More than that, however, it can also be a particularly challenging time for figuring out how to handle financial pressures. This can be of concern to people who choose to divorce later in life, especially as the divorce rates have risen for Americans over 40 and doubled for couples over 50 years old.

For people choosing a divorce at the same time that they near retirement age, financial issues could be compounded. It is important for divorcing spouses to have an understanding of the financial picture in question, including income, debts, assets and budgets. While people with limited funds can face financial challenges with the end of a marriage, high-asset divorces also carry their own complications.

Maximizing your college student's financial aid

Many college students, no matter their parents' income, fill out the FAFSA in hopes of maximizing the financial assistance they get for college. The process can be relatively straightforward for children whose parents are married to each other.

However, it may be more complicated for those children with divorced parents, whether or not these parents have remarried. Here is a look at some ways you might be able to help your child maximize his or her efforts.

Leaving a violent marriage

Domestic violence is a common cause of divorce. To be granted a divorce in New Jersey, the spouse who filed for divorce must state a reason he or she is asking for the divorce. Examples of grounds for divorce include extreme cruelty, desertion, adultery and irreconcilable differences. A no-fault divorce may be granted if the parties have been separated for 18 consecutive months, and there is no chance for reconciliation.

When children are involved, the divorce process may be very difficult immediately after a separation, especially if the relationship was violent. University of Illinois researchers studied how domestic violence during a relationship affects co-parenting during the first year of a separation.

What to consider in a child custody case

There are many questions that a New Jersey resident may need to consider when creating a child custody plan. In some cases, it is possible for both parents to share either joint or legal custody. It may also be possible to share both legal and physical custody. However, if one parent is not capable or willing to provide for the child, it might be best for the other to seek sole custody instead.

The parents may choose to decide on their own who gets custody of a child. If parents cannot come to an agreement on their own, the court will make the final decision as to who gets custody. It is possible for parents to come to a decision on their own with help from mediators or other outside counsel. This is often beneficial as it can allow the parents to retain control over decisions relating to their child and work toward creating a stable living environment.

What a spouse's unusual financial moves might mean

Some New Jersey residents may be alerted to the possibility that their spouse is planning to file for divorce by that person's financial actions. For example, one man's wife suddenly decided to put a significant amount of money into a certificate of deposit that only had her name on it. This was money the couple had made on the sale of their home. In addition to the $90,000 from the home, the woman added a $40,000 payout she received after a job loss. The man asked his wife to either add his name to the account or return the amount to their joint accounts, but she did not.

There could be other explanations for this including that the man is irresponsible with money. However, a person who notices a spouse's unusual financial activity, such as moving money into an individual account, might want to take a few steps for financial protection. One is documenting communications. The person may also want to talk to an attorney. It may be necessary to talk to the bank about how the spouse's accounts might be frozen and the money retrieved.

Financial mistakes to avoid during a divorce

States in the Northeastern United States, including New Jersey, have some of the lowest divorce rates in the country, according to the U.S. Census Bureau. That statistic can be partly attributed to the fact that people tend to marry later in life in New Jersey when compared to other states. 

high-net-worth divorce can become extremely complicated. The important thing for both spouses to remember is to keep their financial assets in order. No one wants to spend too much money on a divorce, but there are plenty of ways to hemorrhage money during this time. Avoid detrimental mistakes that can sink finances, such as: