by questful | Dec 10, 2023 | Financial, Uncategorized
Unlike most the traditional separation process, the collaborative approach with divorce includes a financial neutral that usually holds the designation of Certified Divorce Financial Analyst (CDFA).
The support that the financial neutral provides is helpful with identifying the most appropriate financial settlement option for both spouses by utilizing the flexibility with the Colorado divorce statutes in the areas of property division, spousal maintenance, and child support.
Once detailed financial information is collected, the financial neutral then builds a forward-looking living expense budget and the marital balance sheet (inventory of all assets/liabilities). This information is then used to model and evaluate different property division (asset/liabilities) and spousal maintenance scenarios to understand the impact to each spouse’s current and future cash flow and net worth.
Often there exists projected disparate financial futures post decree, allowing the financial neutral and the collaborative team to negotiate adjustments to property division, spousal maintenance, and other financial areas such as child support to best meet each spouse’s financial goals.
Patrick Janssen
Patrick Janssen MBA, CDFA, CRPC®, APMA®
Patrick@aspirewmg.com
office: 720.805.0051 | mobile: 720.314.9774
5251 DTC Parkway, Suite 1045 | Greenwood Village, CO 80111
www.aspirewmg.com
www.divorcefs.net
by questful | Dec 10, 2023 | Financial, Uncategorized
Divorce is a tumultuous life event, and when intertwined with financial decisions such as refinancing, it can add a layer of intricacy to an already complex situation. Typically, individuals refinance their homes to secure lower interest rates and reduce costs, but there are circumstances in which higher interest rates may be a strategic choice during a divorce. In this article, we’ll explore the potential benefits and drawbacks of opting for refinancing with higher interest rates and underline the necessity of consulting with financial professionals during these uncertain times.
The Advantages of Refinancing with Higher Interest Rates
Refinancing with higher interest rates may seem counterintuitive, but there are situations where this approach can be advantageous.
- Immediate Financial Relief: If you find yourself grappling with exorbitant monthly mortgage or loan payments amid a divorce, refinancing at a higher interest rate, even with a larger loan, can offer much-needed respite in monthly payments. This can be especially valuable if you require a lump sum of cash for various divorce-related expenses, including attorney fees or the equitable division of assets.
- Short-Term Requirements: If you anticipate selling your property or paying off the loan within a relatively short timeframe, opting for a higher interest rate may not significantly impact your overall interest payments. Many individuals choose to refinance at higher rates with the expectation of refinancing again when interest rates decrease or before putting their home on the market for sale.
- Tax Benefits: Historically low-interest rates and tax changes (increased standard deductions) have caused many individuals to not qualify for the mortgage interest deduction through itemization. However, higher interest rates could allow you to itemize this expense, potentially mitigating the actual impact of the higher interest rate. Consulting with a financial professional can help determine the after-tax or ‘effective’ interest rate.
- Divorce Benefits: Refinancing can safeguard your financial independence in a divorce by separating your finances from your ex-spouse. Maintaining a joint mortgage post-divorce can entail credit risks and complicate estate planning. It’s generally recommended to untangle financial ties as much as possible for a smoother transition and a healthier co-parenting relationship. For instance, in Colorado, joint rights of survivorship will automatically cease after a divorce, transferring ownership to ‘tenancy in common.’ If the non-resident spouse remarries and passes away while still co-owning the property, the ex-spouse and the new spouse would share ownership of the property.
- Income Tax Bracket Consideration: Higher interest rate refinancing may be advantageous for individuals in higher tax brackets where tax deductions hold more value. Conversely, it may not be as beneficial for those in lower tax brackets or those primarily receiving tax-free alimony and child support.
- Lump Sum Maintenance Payout Could Become Deductible Again: A home with significant equity could provide a lump sum maintenance payout to the non-resident spouse. The resident spouse paying spousal support is essentially trading in a non-deductible monthly spousal support payment (spousal support became a non-taxable transfer due to the TCJA in 2019) for a larger tax deductible mortgage payment that pays out the receiving spouse with a lump sum cash payment.
The Drawbacks of Refinancing with Higher Interest Rates
Despite the potential advantages, there are several drawbacks to consider when refinancing at higher interest rates.
- Long-Term Costs: The most glaring downside of refinancing at a higher interest rate is the increased interest payments over the life of the loan. Although monthly payments could be lower (if extending the term of the loan), the total interest paid throughout the loan’s duration can be considerably higher.
- Qualification Challenges: Higher interest rates can pose challenges for individuals seeking to qualify for a new home loan due to factors like income limitations, debt burdens, or loan-to-value ratios. Given the complexities of divorce and shifting financial circumstances, meeting the criteria for a higher interest rate can be a formidable challenge.
- Reduced Home Equity: Refinancing at a higher interest rate results in slower home equity growth compared to a lower interest rate, potentially affecting long-term financial stability and the ability to tap into home equity for other purposes.
- Credit Impact: Difficulties in making on-time payments due to increased monthly obligations from a higher interest rate could negatively impact your financial situation should unplanned financial events occur such as job loss, disability, etc.
While refinancing with higher interest rates is not the conventional choice due to the potential for increased long-term costs and reduced financial benefits, it’s crucial to evaluate your unique financial situation and objectives thoroughly, especially during a divorce when asset ownership becomes more intricate. Seeking guidance from a financial professional can help you model various scenarios, taking into account variables such as tax benefits, financial goals, and budget constraints, empowering you to make well-informed decisions about refinancing. Don’t hesitate to reach out to us for assistance during this challenging phase.
Amy Mahlen Melander
Amy Mahlen Melander, CFP®, CDFA®
A.M. Financial
Divorce Financial Services
Phone: (303) 875-8730
7887 E. Belleview Ave., Suite 1100
Denver, CO 80111
www.amf-divorce.com
amahlen@mahlenfinancial.com
by questful | Oct 15, 2023 | Legal, Uncategorized
If there are concerns about a parent’s ability to abstain from alcohol during their parenting time, there are different options for addressing those concerns in real-time.
The first step is determining whether a parent’s alcohol use rises to the level of necessitating monitoring. In determining whether monitoring is necessary, although not an exhaustive list, the following factors (or a combination thereof) may suggest that real-time alcohol monitoring is appropriate:
- History of DUI/DWAI.
- Consuming alcohol every night.
- History of alcohol abuse but not currently enrolled in treatment (AA, sobriety counseling, outpatient treatment, etc.).
- Hiding drinking from family members.
- Consuming hard liquor directly from the container.
- May go days without contact with friends or family members.
Striking a balance between continued contact with the children and ensuring their safety is critical if a parent has an unmanaged alcohol abuse issue. There are 3 ways to actively monitor alcohol use in real-time during parenting time: a handheld or portable breathalyzer, Soberlink and BACTrack.
Portable Breathalyzer:
Handheld breathalyzers purchased from Amazon, Walgreens, etc. are the least reliable devices and have significant limitations. There are multiple products on the market that may not be accurate, so make sure you research the device and verify that it has been certified. Typically, a parent will blow into the device prior to the commencement of parenting time and at drop-off, and show the other parent the results in-person and in real-time. As a breathalyzer purchased from Amazon has no facial recognition features, if additional testing results are shared during parenting time via photos, they cannot be considered reliable. Although intrusive, consider Facetiming with the testing parent to visually verify the test and results.
Soberlink/BACTrack:
Soberlink and BACTrack are handheld breathalyzers that use either facial recognition software (Soberlink) or video (BACTrack), and send the results to the other parent in real-time. Soberlink is a standalone breathalyzer that captures an image of the user’s face with built in cell service to transmit the results in real-time to the other parent via text and e-mail (this option must be selected in the subscription package otherwise weekly e-mailed reports are the default). Soberlink is considered the Gold Standard for active monitoring of alcohol use, the user is typically assigned a case manager, and tests are usually scheduled every 4-6 hours during waking hours; however, the cost of the device and the monthly subscription can be a concern.
BACTrack is a handheld breathalyzer without built in cell service that uploads results via Bluetooth to the user’s cell phone. BACTrack takes a video of the user’s test that is then shared with the other parent. While BACTrack has been approved for use by courts and is significantly cheaper than Soberlink, because the device has to connect to a cell phone and tech support is an additional cost, user error can interfere with timely uploading results.
Secondary Testing:
No monitoring protocol is foolproof. As all three active monitoring options only address sobriety during waking hours, often Soberlink or BACTrack are combined with random, weekly Urinalysis (UA) testing or monthly PEth testing (bloodspot testing) to determine if alcohol has been consumed overnight. UA testing typically has a 24-48 hour look back window based on how fast the individual metabolizes alcohol. PEth testing utilizes markers in the blood to determine if a parent has binged alcohol in the last 28 days, but cannot pinpoint when alcohol consumption occurred within the 28-day window or the exact quantity of alcohol consumed.
Woody Law Firm, LLC
James M. Cordes, Esq.
jcordes@woodylawllc.com
Woody Law Firm, LLC
140 E. 19th Ave, Suite 600
Denver, CO 80203
303-968-1711
by questful | Aug 16, 2023 | Legal, Uncategorized
Do want to file a joint divorce with your spouse, but you’re not sure where to start? In this article, I’ll guide you through the next steps you should take.
Filing as Co-Petitioners means that both you and your spouse will sign the Petition for Dissolution. While you’ve probably already had some discussions with your spouse, getting him or her onboard is the first step.
Decide When To File. In Colorado, there is a 91-day waiting period between when the divorce is filed and the date when the judge can sign your Decree. Some couples choose to file the Petition before all the paperwork is completed so that this clock can start ticking. Other couples wait until all the paperwork is done, so they can file everything at the same time. If you choose this second option, your paperwork will sit for 91 days and then the judge will sign your Decree.
Collect your financial information. In Colorado, each spouse must complete extensive financial disclosures. These include bank statements, pay stubs, tax returns, and childcare expenses for your children.
Meet with a Certified Divorce Financial Analyst (CDFA). Does the thought of providing all your financial documents overwhelm you? If so, a CDFA can help you and your spouse gain a clear picture of your assets and debts. They can also assist you in creating a post-divorce budget.
Consult with a Mediator or Parent Coach. If you can’t agree on custody arrangements or aren’t sure where to start in crafting a Parenting Plan, a therapist or parent coach trained in collaborative law can help you and your spouse work through disagreements and reach a resolution.
Talk to a Collaboratively Trained Lawyer. Most people think that hiring a lawyer is the first step. However, a lawyer’s main role is to advise you on the law and make sure your agreements are in the proper format for court. While the lawyer can give you a list of topics to discuss with your spouse, a financial advisor or parent coach will be better suited to help you problem-solve. Hiring an attorney too early in the process can also make your spouse feel defensive and cause unnecessary expense.
Finally, I’ve had clients who avoided hiring attorneys for their amicable divorces because they were worried about increased difficulty, expense, or conflict. However, not having guidance from an attorney or other professional can lead to unclear agreements that cause problems in the future. By agreeing with your spouse on a course of action, it is possible to complete a divorce without stepping foot in court.
If you have more questions about your divorce, I’m here to help!
Katelyn Ridenour Parker
8400 East Prentice Ave.
Suite 1500
Greenwood Village, CO 80111
Phone: (720) 213-6858
katelyn@oneaccord.legal
www.oneaccord.legal
by questful | Mar 19, 2023 | Financial, Uncategorized
Going through a divorce can be an emotionally and financially stressful experience. Dividing assets and liabilities, including the family home, can be a complex and challenging process. This is where a divorce mortgage expert can play a crucial role in helping you navigate through the process.
A divorce mortgage expert is a specialist who understands the unique financial and legal aspects of divorce and can help you make informed decisions about your mortgage and housing options. Here are some reasons why it is important to start working with a divorce mortgage expert right away at the beginning of the divorce process:
Assessing Your Options
One of the key benefits of working with a divorce mortgage expert is that they can assess your financial situation and help you understand your options. For example, they can advise you on whether it makes more sense to sell the family home, refinance the mortgage, or stay in the home until a later date.
Financial Planning
A divorce mortgage expert can also help you develop a financial plan that considers your current and future needs. This includes calculating your monthly expenses, understanding the tax implications of selling the family home, and creating a budget that reflects your new financial reality.
Mitigating Financial Risks
A divorce mortgage expert can help you mitigate financial risks associated with the divorce process. For example, they can advise you on how to protect your credit score, avoid defaulting on your mortgage, and ensure your mortgage payments are made on time.
Legal Support
A divorce mortgage expert can work closely with your divorce lawyer to ensure that you are financially able to afford to keep or sell your home and what is needed for mortgage qualification.
Stress Reduction
Divorce can be an incredibly stressful experience. Working with a divorce mortgage expert can help reduce some of that stress by providing clarity and guidance on your financial options. They can also help you develop a plan for the future that gives you a sense of control and direction.
In conclusion, working with a divorce mortgage expert can provide many benefits and help you make informed decisions about your mortgage and housing options. If you are going through a divorce, it is important to start working with a divorce mortgage expert right away at the beginning of the divorce process to ensure that you receive the support and guidance you need to navigate this challenging time.
Jan Parsons Smith
Production Manager, NMLS#442729
jparsons@primelending.com
720-308-1320
www.JanParsonsHomeLoans.com
5613 DTC Parkway, Suite 750
Greenwood Village, CO 80111
by questful | Nov 1, 2021 | Legal, Uncategorized
Collaborative divorce is focused on minimizing the harmful effects of divorce on families by helping you reach respectful solutions tailored to your family. If you are ultimately unable to resolve your divorce by reaching agreements, you’ll end up in trial with a stranger in a black robe (the judge) deciding for you. When negotiations or agreements do stall, threatening to take the case in front of a judge is often a knee-jerk reaction that fails to appreciate the true impact of a trial on your family.
Unless they have been through litigation before, spouses are unable to comprehend the emotional damage inflicted by adversarial hearings and trials. During a trial, you and your spouse will be subject to cross examination. You will be grilled by your spouse’s attorney and will end up opening Pandora’s Box when testifying. The statements made can’t be taken back and you’ll dredge up years-long arguments and humiliating events in a public forum, especially when children are involved.
While any hearing will be very stressful on you, the negative impact on children and your ability to successfully co-parent in the future is undeniable. Two dynamics are primarily responsible for this negative impact. The first dynamic is the emotional wound inflicted during the hearing itself. Feelings of betrayal – “How could you let your attorney treat me that way?” or “How dare you tell your attorney to ask me that” – will persist long after a trial and many parents are unable to move past that betrayal. You have years of co-parenting and decisions for your children ahead of you, and real work must be done afterwards to be able to forgive and not allow the experience of an adversarial trial poison the well.
The second dynamic is having a judge thrust their decision upon you after only a few hours of trial. Trials breed continued conflict as one or very often both parents are bitter and feel the wrong result was reached. When a parent believes the result is an injustice, the natural human response is to protest the result by either rigidly enforcing the orders to punish the other parent or by simply ignoring the orders. Generally, parents are more likely to follow court orders and not fight each other at every turn when they arrive at their parenting plans by agreement.
While contested trials and hearings have a place in divorce and custody disputes, it’s important to consider how going to trial will impact you and your family both during and long after your case is over.
James M. Cordes, Esq.
jcordes@woodylawllc.com
Woody Law Firm, LLC
140 E. 19th Ave, Suite 600
Denver, CO 80203
303-968-1711
