Money & FInances

How Divorce Can Have a Huge Impact on Your Retirement Savings

retirement savingsIf you have a retirement account, there's a good chance that it's your largest asset. However, if you're considering a divorce, then you may be wondering if dissolving your marriage will damage your retirement savings.

This depends upon the type of retirement accounts you have. Because this subject is complex, it makes sense to explore how common types of retirement accounts are treated in a divorce.

Social Security

This retirement income source frequently is the largest resource for retirees. If your marriage has lasted more than 10 years, then you may be entitled to collect benefits from Social Security based on your ex-spouse's account. As long as you are unmarried, aged 62 or older and your ex is entitled to benefits, federal law allows you to collect. Of course, this only makes sense if your ex is receiving an amount in excess of what you would receive on your own.

401(k)s, IRAs and Pensions

Federal and state law also may play a role in regard to how getting divorced affects your retirement. For instance, a 401(k) or 403(b) is governed by federal law, and this may affect how these accounts are divided. With IRAs, state law governs how these funds will be distributed. Pension benefits are rare in this age, but they are administered according to the employer's vesting schedule, which can widely vary from one firm to another.

Retirement Accounts: Marital or Separate Property?

If you were contributing to a retirement savings plan before you got married, then most courts will consider the premarital amount as belonging solely to you. However, any retirement funds that were contributed while you were married may be subject to being divided with your ex-spouse. If it's vital to you that your entire savings for retirement remain intact, then it may be possible to negotiate with your ex with regard to other valuable assets, like the family home.

If you and your spouse are thinking about splitting up, then it's wise to know that a Qualified Domestic Relations Order, or QDRO, may be in your future. This is a package of instructions detailing how a specific retirement account will be divided. Once approved by the court, the QDRO goes to the plan administrator to complete the division of funds.

If you're concerned about how divorce might affect your retirement savings, then it's sensible to call Sabra Law Group at (646) 472-7971.

 

 

 

 

 

 

How to Protect Your Business Financially During a Divorce

protect your business financially

Are you a business owner who is considering divorce amongst the pandemic?  If so, you are not alone, the COVID-19 pandemic has caused a lot of stress and upheaval.   Whether that stress has been financial, emotional, or caused by other extenuating factors, it has definitely contributed to the rising divorce statistics.

 

When there are children, real estate, and businesses involved in a divorce, it definitely makes the divorce process more complex. 

 

By being more knowledgeable, it can give you the upper hand. It is best to speak to legal and financial professionals who can provide guidance based on your state’s regulations.

 

The first aspect to consider is that your spouse’s attorney may request financial documents related to the business as well as an explanation of what type of business you own and how it is structured.

 

It is best for you to continue focusing on your business and perhaps appoint your accountant or a business appraiser as the designated person who will compile all the necessary documents and information.

 

Furthermore, the best way to approach this is to be upfront and honest and not hold anything back.  The more upfront you are from the beginning, the smoother the entire process will go.

 

It is also important to consider that depending on the complexity of your business; your spouse’s attorney may not understand the business; which can complicate matters if not handled strategically.  The best way to handle this is to set up a meeting with both side’s attorneys, both spouses, and a financial expert.   This meeting will help provide more clarity to your legal team so they can provide the best guidance.  

 

What Happens When Both Spouses Own the Business Together?

 

For the most part, it is unlikely that both parties would remain a part of the business after the divorce.  A more realistic scenario may be that one party may end up buying the other party out or giving up the business with their soon to be ex-spouse and start a separate new business (whether solo or with additional business partners). 

 

The business partner that usually ends up staying in the business or buying the other partner out is the one that was the most involved in the business (this can equate to more hours spent, more investment spent, more contributions made, etc.).  

 

If you need assistance with how to protect your business financially during a divorce, contact Sabra Law Group today for a confidential consultation at (646) 472-7971.

 

 

 

 

 

Things to Consider Before Rushing Into a New York Remote Marriage Ceremony 

Remote Wedding On April 19, Governor Andrew Cuomo announced the issuance of an executive order that allows marriage services to be conducted by clerks via video conference.

That's good news for couples who are anxious to begin their new life together, despite the pandemic. However, it does not necessarily follow that it's wise to jump into getting married remotely in New York. 

It's still smart to think about all of the ways that marriage may change your lives. For instance, consider both of your career goals. Will your job or your future spouse's job someday force you to move to another city or another state? If so, is that a move that the other partner is willing to make?

For many couples, it similarly is critical to know and understand each other's finances. That means disclosing things like how much credit card and student loan debt each of you has. Moreover, you'll want to share any financial obligations that you have to a former spouse or a child from a previous relationship.

Talking about assets is just as important. To guide your financial conversation, consider entering into a prenuptial agreement before getting married remotely in New York. 

Prenups may be short, simple, and straightforward or longer and more complex depending upon the couple's wishes and their financial situation. With a prenuptial agreement, it's possible to define that each partner will keep the debt that came into the relationship with them and that certain family heirlooms will remain the property of the spouse who brought it to the marriage. It's even possible to discuss potential spousal support terms.

Too many couples get married without knowing much about each other's finances. Having a prenuptial agreement drafted ensures that you're both aware of each other's financial standing. It also leads to helpful discussions regarding how you both approach money matters.

It may not seem romantic to pause to discuss a prenuptial agreement before getting married, but it nonetheless makes good sense. That is especially true during a time that is distinctly unsettled and unfamiliar. Most people's day-to-day lives look nothing like they usually do, and this can lead to decisions that one day may be regretted.

Recently, we drafted and negotiated the terms of a prenuptial agreement for a client who was initially planned to get married this summer – but his marriage was expedited shortly after Governor Cuomo’s announcement when his wife submitted for the opportunity to get married via video conference – and on television!  So while a prenuptial agreement typically gets prepared and negotiated within 6-8 weeks, here we didn’t have the luxury of time and we got it done within 48 hours – even coordinating remote notarization of the agreement.

If you are considering getting married remotely in New York, then contact the Sabra Law Group at 646-472-7971. Having a prenup drafted by the Sabra Law Group is the common sense approach to getting married in these unprecedented times. Call or click here to schedule a time to speak with someone in our office.
 

Why Prenups Are The Norm for Millennials

Prenups for MillennialsThe stories have been in the media lately. Millennials are requesting prenups before tying the knot in record numbers.

Why is this younger generation much more open to the idea of prenups? Several factors may be at play.

According to the American Academy of Matrimonial Lawyers, a full 62 percent of attorneys have noticed that more of their clients are asking for prenuptial agreements within the last three years.

One of the main reasons behind this increase is that this generation is tending to wait until later in life to get married. This may mean that they have more assets to protect.

Putting off marriage gives them a chance to focus on their careers. This means that they have a chance to build up their 401(k) or to aggregate wealth through an employer's stock program. Perhaps they will buy some real estate.

In the event of a divorce, the spouse or spouses who have accumulated considerable assets before marriage may want to safeguard those assets for themselves.

However, this is just one more reason why it makes sense to have a prenuptial agreement in place. Such an agreement can protect a spouse from having to assume responsibility for a sizable debt that doesn't really belong to them in the event that they get a divorce.

Frequently, this age group also is deferring marriage because of its financial obligations. With student loan debt at record highs, millennials may be reluctant to saddle a spouse with such a heavy responsibility.

Debts from credit cards or personal loans also may put a strain on a relationship. Consequently, the couple may want to specify in a prenuptial agreement that the debt belonging to one spouse or the other remains that individual's responsibility should a split occur.

Other millennials are choosing prenuptial agreements because they are themselves the children of divorce. After suffering the pain of watching their parents go through a difficult process, they may be seeking to protect themselves from a similar situation.

All of these factors combine to explain why this particular generation is beginning to see prenuptial agreements as the norm rather than the exception. It's a wise choice, one that could protect the financial and emotional future of both parties and any children they may have.

To learn more about why people are choosing prenups to protect themselves and their families, call the Sabra Law Group at (646) 472-7971.  Or, if you know you are ready, call now to get started.

 

Why Divorce Doesn’t Have to Be a Financial Disaster

Financial DisasterMany pressing concerns arise when divorce is on the horizon. Children are the primary focus, but it is nearly as vital to concentrate on financial concerns. The more stable and predictable your economic security is, the better able you'll be to take care of yourself and your children.

Regardless of whether your divorce is acrimonious or not, it's important to give early consideration to financial matters. This typically involves opening personal banking accounts that are in your name only. Accordingly, your former spouse won't have access to any funds in these accounts. It is advisable to inform your spouse about the new banking accounts simply so that you cannot be accused of hiding money.

If you and your spouse have joint credit accounts, now is an excellent time to close them. You can always decide how to divide any outstanding debts through divorce mediation.

Additionally, if there are joint investment accounts, you might consider withdrawing half the money, reserving the other half for your spouse. Other couples decide to require the signature of both parties on any transactions dealing with an investment account. This ensures that no one has an opportunity to hide funds.

Many divorcing couples further decide to get their own post office boxes as they go through the divorce process. In the event of an acrimonious divorce, it's not unusual for one spouse to hide correspondence from the other. The result could be missed bill payments and other money-related chaos.

The best way to prevent money from complicating a divorce is to sign a thoughtful prenuptial agreement before tying the knot. These contracts can be highly customized to reflect your family's unique circumstances. They may address who is responsible for student loan debt and who gets your grandmother's antique clock if the marriage doesn't last.

A prenuptial agreement may include provisions for the support of a non-working spouse in the event of a divorce. This may include alimony payments and other considerations that are left to the discretion of the couple.

Each family's situation is unique. A well-written prenup takes this into account. In fact, it may be the primary means of protecting your money, and it can be revised to reflect your changing economic status.

If you are ready to learn more about how you can protect yourself from a financial standpoint in the event of a divorce, contact the Sabra Law Group at (646) 472-7971.

 

Tips for How to Handle Asset Division During a Divorce

Asset DivisionIn addition to being an emotional minefield, divorce presents a myriad of other challenges. One of the largest of these is asset division.

It's a question that is at the heart of many of the bitterest disagreements during dissolution proceedings. One of the reasons for the difficulties surrounding this issue is New York's system of equitable distribution.

Under this system, the court fairly divides the marital property. This doesn't mean that each partner will get 50 percent of the assets. Instead, the judge will work toward an equitable outcome by taking several factors under consideration.

These factors include the length of the marriage, the age, and health of each spouse and the income and property owned by each spouse at the time of marriage and at the time of separation.

Other factors include the need of a parent with custody to continue living in the family home and whether or not spousal maintenance will be awarded. Additionally, the judge weighs the loss of health insurance, pensions and inheritance rights that both spouses may suffer.

Judges further have the power to consider whether or not a spouse has an equitable claim on marital property to which he or she does not have the title. In other words, if the non-owner spouse spent money, time and effort on the property, then they may be legally able to claim some portion of that asset in a divorce.

Asset division can be genuinely complicated, and it's easy to see why it also tends to be contentious. Nobody wants to give up any portion of an asset that they believe they rightfully "own."

This is yet another argument in favor of entering into a fair prenuptial agreement before saying "I do." Such an agreement ensures that the interests of both spouses are protected in the event that things don't go as planned.

This means that the spouses are able to specify how assets will be divided during a potential separation. A prenuptial agreement thereby eliminates much of the fighting that too often accompanies the dissolution of a marriage.

Prenuptial agreements can be helpful financial planning tools that protect both partners and encourage them to discuss the more practical side of their relationship. It's an opportunity to learn more about each other and what their partner values most.

If you have any questions about asset division in your divorce, contact the attorneys at the Sabra Law Group at 646-472-7971.

 

Why Having a Prenup Agreement Can Safeguard Your Future

Prenup Agreement The future is always unpredictable, which means that no one can foresee with accuracy what tomorrow holds. This uncertainty is why more couples are choosing to sign a prenup agreement before they walk down the aisle.

Perhaps this seems like a pessimistic thing to do, but it actually is eminently practical. It is a wonderfully easy way to ensure that the diamond ring that you inherited from your grandmother stays in your family. Additionally, your prenup can specify how the proceeds will be divided if the family home must be sold in the event of a divorce. 

While a prenup is used to protect current assets, it also may be possible to draft the contract so that it may safeguard future assets. Such protection is possible only if the agreement is carefully drafted. Typically, future assets will need to be defined and described in great detail. If they are not, then the contract may be invalidated by the court when one party tries to enforce it against the other.

Another way that a prenup can safeguard your future is by including details about debts. For instance, if one partner incurs a huge load of education loan debt during the marriage, it can be spelled out in the prenup that this debt will be that partner's sole responsibility in the event of a divorce. 

Similarly, the partners may want to define who will be liable for certain credit cards, loans or other debts if the marriage ends. This is simply wise planning on the part of the prospective spouses. No one wants to get saddled with a debt that does not belong to them, particularly in the wake of painful and expensive divorce proceedings. A heavy load of debt makes it difficult to move forward, and the person who incurred the debt reasonably can be expected to assume the responsibility for paying it.

Discussing how you will finance your future together before tying the knot will help to avoid conflict and allay any “surprises” in the future should either partner enter the marriage with certain preconceived expectations that may not have been discussed and addressed during your courtship. Of course, it is not possible to address every possible nuance and situation that could arise in the future, but having these tough conversations now and being clear about you and your partners’ philosophy around money can further safeguard your future together. 

In addition, prenup agreements can be used to protect future inheritances as well as family property, money or trust interests of which you may be the owner or beneficiary, and ensure it will stay in the family in the event of a future breakup or upon your death.

Prenuptial agreements not only typically contain provisions addressing what happens with property in the event of a future breakup, but they can also provide what assets are transferable to your partner upon death as well as provide adequate financial support in such event.  

Moreover, if you have children from a prior relationship, a prenup agreement is a great way to create clarity with your partner and protect your children and ensure that they are provided for as well.

And, if you or your partner have a pet, the agreement can contact provisions relating to their care and support. 

It is advisable to involve a knowledgeable attorney as soon as you decide that a prenup agreement is right for you. In order to be legally binding, it is necessary to define many highly detailed components, making the right kind of experience indispensable to the process. 

If you are still curious about your ability to safeguard future assets, contact the Sabra Law Group at (646) 472-7971. These experienced legal professionals place an emphasis on drafting a sensible prenup agreement that will protect your interests in any eventuality.

Why it is Important to Have Two Separate Attorneys When Creating a Prenup

Prenup - Separate AttorneysPrenuptial agreements are not just for wealthy individuals any longer. These days, a premarital agreement may be entered into for any number of reasons. The parents of one of the parties may insist upon a prenup, especially if they want to ensure where their own assets will be allocated after their death. Frequently, at least one of the parties to the agreement is the individual who requests it. This is likely because they want to protect assets that they acquired before getting married.

The basic concept behind a prenuptial agreement relates to the possibility of a divorce. No couple wants to think about a day when they no longer want to be together. Nonetheless, such a legal document can provide peace of mind while also leading the couple to consider and discuss issues that might not otherwise be introduced. Rather than driving a wedge between the couple, the process actually may bring them closer.

Most of the considerations that are tied up in a prenuptial agreement are financial. The terms of alimony and property division are decided in advance of the marriage. Of course, couples are free to include almost anything they like in their own agreement. The only thing that is prohibited in such contracts relates to (unborn) children. Questions of child support and custody may only be decided upon at the time of divorce. Including such items in a prenuptial agreement may invalidate portions (and in some cases the entirety) of the agreement.

It may be tempting for an engaged couple to seek the services of just one attorney for a prenuptial agreement. Nonetheless, it is almost always advisable for each partner to seek independent legal advice. This is not because the situation is adversarial or because one future spouse is trying to hide something from the other. Rather, securing independent legal counsel ensures that both parties are getting the fairest possible deal. In addition, having counsel for each of you removes any future claims of duress, claims of not understanding the agreement and lack of fairness. Commonly the courts will look to the conscionability of the agreement both at the time it is entered into and at the time it is enforced.  Having your own lawyer means that your interests are fully protected, and so are those of your future spouse.

If you have difficulty agreeing on the terms of the agreement, consider mediation in New York. This collaborative, constructive process makes for a positive experience. The outcome is a prenuptial agreement that is fair and beneficial to both parties.

If you are ready to learn more about prenuptial agreements in New York, contact the Sabra Law Group at (646) 472-7971. Their advice will ensure that you are prepared for anything that the future may hold.

 

Prenuptial Agreements for Same Sex Couples in New York

Prenupital Agreements for Same Sex Couples in New YorkIn 2011, same sex marriage in New York became legal. It was a happy day for many families across the state, and with the ability of same-sex couples from other states to get married in New York too, many people celebrated the legalization and took advantage of the newfound ability to become legally married. 

Gay or straight, no one gets married with a pessimistic attitude. Marriage is a happy and hopeful event, but it doesn't mean that some planning is not appropriate. A growing number of gay and lesbian couples are choosing to complete a prenuptial agreement prior to the ceremony. 

Regardless of their orientation, many couples balk at the idea of a prenuptial agreement. They are in love and committed to each other. Thinking about the possible breakdown of the relationship is difficult. Nonetheless, a prenuptial agreement can be seen as an act of love. 

A prenuptial agreement may protect one partner from the debts of the other. It also may ensure that children from prior relationships are supported and protected or that a family business can be maintained no matter what. 

Prenuptial agreements for gay and lesbian couples are much like the same agreements for straight couples. However, additional considerations may need to be taken into account if the couple lives in a state where same sex marriage is not yet legalized. This may make it difficult to have the prenuptial agreement recognized in that state. Accordingly, you would need an experienced New York prenuptial attorney to draft the agreement so that it would be enforceable regardless of where you live. 

Marriage laws in the U.S. are evolving, but they still have a way to go. Because same sex marriage is not legal at the federal level, questions of prenuptial agreements and estate planning may face additional complications. The best way to overcome these challenges is by working with an experienced attorney who has helped other same sex couples. 

The guidance and advice of an attorney may give you the peace of mind that you need as you move forward to a happy future. A well-drafted prenuptial agreement can ensure that your children are provided for, that your debts won't affect your spouse or resolve numerous other potential problems. 

If you have any questions about preuptial agreements for same sex couples in New York and any related family law matters, contact the Sabra Law Group at 646-472-7971 to schedule a consultation.

 

How the New Tax Law Will Impact Spousal Support Calculations in New York in January 2019

Spousal Support CalculationsChanges go into effect on January 1, 2019, that will impact spousal support payments for people who divorce in 2019. The signing of the Tax Cuts and Jobs Act in December 2017 created changes that will impact couples who divorce after December 31, 2018.  The previous law made spousal support a tax deduction for the payor while it was taxable income for the payee. Beginning in January 2019, the payor will no longer be able to deduct these payments, and the recipient is no longer required to pay taxes on the income. 

This is a critical change that all couples who are considering divorce should take into account. Spousal support calculations in New York will change drastically in the new year. Here are some of the ramifications that may need to be weighed. 

Typically, the payor of spousal support does so because they have a larger income than the individual who receives the payments. If the payor no longer gets to deduct the spousal support payments before determining what their income tax due is, and instead, required to pay income taxes on the total; then there will be less money available to support the family while the government benefits from collecting more tax dollars. 

Under the old law, people who were paying spousal support frequently saved money on their taxes. This is because the amount that they paid in spousal support (maintenance) was deducted right off of the top of their taxable income.  Furthermore, because that they are taxed at a higher tax bracket, the tax dollars paid would have been more than, when reported as income by the recipient spouse (typically) taxed at a lower tax bracket, and thereby there was more money to share in the family. 

It may look as if the new tax law which goes into effect in January 2019 simply shifts the burden of paying taxes on spousal support payments from the payee to the payor, but the effects may be more far-reaching than that. The paying spouse is almost always subject to a higher tax rate than the receiving spouse.  Accordingly, after January 1, the payor will pay the taxes on the maintenance payments at their higher tax rate rather than the recipient paying the taxes at their lower rate. 
With the upcoming increasing tax burden on the payor (and hence, on the family), it seems logical that couples seeking a divorce may want to consider resolving their situation before December 31, 2018. 

 

Couples whose divorce proceedings are finalized in 2018 or who are already divorced will largely not be affected by the change. However, seeking any alteration to an existing spousal support agreement may result in being subject to the new 2019 tax law. 

Speak with a legal professional at the Sabra Law Group by calling 646-472-7971 today.