Five Reasons To Hire A Divorce Financial Expert

One of the first issues to address with a your divorce attorney is whether or not to hire a valuation expert.

This decision should be made early as the best experts can be quickly snapped up by your opposition.

Hiring an expert at the tail end of the case is complicated by time and document production constraints.  

More often than not a financial expert can be helpful--if only for the piece of mind.  But the good ones are expensive, so it's best to have a cost versus potential benefit analysis discussion with your lawyer at the outset.  If in doubt meet with the potential expert and your attorney to gather more information.  Be frank about your ability to pay.  

There are several reasons to retain a financial expert for your divorce:

1.  Business ownership:  You or your spouse have an ownership interest in a business.  Attorneys are not typically qualified to value a business nor to interpret or audit business records.

2.  Failure to report earnings or income.  If you suspect your spouse or her business of under-reporting income, a valuation expert can conduct a forensic audit of the books.  These types of audits can be very expensive, so be circumspect in this decision.

3.  Tax issues:   How to reduce the tax consequences of transfers incident to a divorce?  Have returns been filed? How to reduce the risk of an audit?

4.  Spending/Debt analysis:  Are you claiming your spouse squandered marital assets through outrageous and wasteful spending?  Gambling?  

5.  Tracing Separate Property:  Did you or your spouse bring assets into the marriage or inherit and estate during the marriage?  An expert can help define and segregate these assets in order to bolster exclusion arguments.  If the assets were co-mingled or marital funds were used to maintain or enhance the property, then an expert can help quantify this analysis.  An argument may exist for inclusion under certain circumstances.

Financial experts also assist in the definition and organization of relevant financial records.  

She can also accompany your attorney to mediation or testify at arbitration or trial on your behalf.  

Always build the best team (within your budget) for the best possible outcome.  

It may take a village.  

More thoughts ...

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When Can My Child Decide Where to Live? 

Who Gets the Pets in a Divorce?

Animal lovers may be aghast, but warring parents are often so busy fighting over their two legged offspring that the courts simply don't have the time nor inclination to consider the best interest of Sparky.

A beloved cat, a pampered pup--who gets Mr. Dribbles when mom and dad are breaking up?  Do courts consider the best interest of the pet (or the owner) when making that call?

In some families pets are treated as children.  Particularly when the couple has not conceived or adopted their own.

Not in divorce court.  Michigan judges are required to treat pets as personal property.  Like the coffee table.

Reasonable couples may agree among themselves to share custody of a pet.

The courts cannot order puppy visitation, but some divorce decrees do contain  voluntary provisions--which may be enforceable. 

If Sir Grand Rudolph III is a highly decorated show dog, the court might consider an appraisal by a valuation expert when awarding the little champ to either party--but it's a balance sheet item, not an emotional determination.  Same goes for farm animals.  God's creatures are not treated the same as humans by the court--no matter their place in the household.

What if Chip's strongly attached to his beloved lemur Lexx?  Does the court consider this relationship in deciding which parent will house Lexx?  Not officially, but in some families, the pet may travel back and forth with the child.  This makes sense particularly if the child is responsible for the care of the pet, or the parent who does not have custody at that time works extended hours during her noncustodial time. 

How about his and her pets?  Animals chose their person, so what happens when their persons no longer chose each other?  Should they be split up?  The couple should consider the impact of separating their pets. Will the fur kids get lonely without each other?

What will the new living arrangements be for the divided family?  Will there be a yard?  Will one spouse be working long hours?  Travelling? 

The best advice is to never leave this decision to the court's discretion.  It's not that the judge doesn't care, but she cannot, under the law, consider the welfare of your pet.

Show compassion when making this call.  Don't use the poor dog as a bargaining chip, and don't be cruel.

Buddy just wants his pack back. 

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Alimony and the New Tax Law

The new tax law is about to have an effect on the pocketbook of divorced or legally separated couples beginning January 1, 2019.  Whether it's positive or negative depends on if you're writing the check--or cashing it. 

After seventy five years, alimony will no longer be deductible by the payor spouse, nor taxable to the payee--a dramatic change which will have a significant impact on divorcing couples and their ability to negotiate a fair settlement.

Alimony or spousal support in varying terms and amounts is not uncommon in divorce or legal separation when the marriage is of significant length, or where there's a substantial discrepancy in income and/or education, health issues or aging parties.  It's also not unusual when a couple has preschool children, and a stay-at-home parent who cannot reasonably balance the cost of childcare with earnings. 

Attorneys have used alimony tax treatment as a favorable method of equalizing household income in order to avoid impoverishing either side.  Deductibility of spousal support was one of the few incentives counsel could use to entice a reluctant spouse to financially assist a lesser earning ex-partner.  Payments to third parties such as mortgage or insurance will no longer be treated as support.

This may seem like good news to the receiver of spousal support, but it's likely the courts will take the lack of deductibility into account when awarding alimony.  Certainly mediators and financial experts, who typically "tax effect" support payments, will do so.  The net effect will be that there will be less income to spread amongst two households. 

Called the Tax Cuts and Jobs Act of 2017, perhaps the new law should named the Better Get a (Second) Job Act.  Either the payor is going to need some extra income, or the recipient will need to supplement--or both.

Under the prior tax law, income in a divided family could be shifted to the lower income spouse who would likely be in a lesser tax bracket.  The net tax effect would have reduced the overall tax burden.  This was handy, as two households can never survive as cheaply as one.


Beginning in 2019, alimony will be treated the same as child support--nontaxable to the recipient.  The tax treatment of child support will not change.

This seems to contrary to the theme of "Tax Cuts." So what was Congress' rationale? The House Ways and Means Committee termed the alimony deduction a “divorce subsidy.” “A divorced couple can often achieve a better tax result for payments between them than a married couple can.” 

To counterbalance, family law practitioners may try to negotiate a reallocation of the Child Tax Credit.  The Act provides for a temporary increase to $2,000 per qualifying child as well as a $500 nonrefundable credit for qualifying dependents other than qualifying children. 

So, if it looks like you are about to pay alimony, hope that
your decree is signed before the end of 2018 or that your lower earning spouse hits the lottery.

December's going to be very busy.

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