Ex-Couples: How Alimony Works

by Stacy Francis, CFP®, CDFA

“It is easy to preach financial independence,” a new Savvy Ladies member remarked at a recent seminar, “but I have already spent ten years as a housewife. My husband and I are miserable together, but there’s no way I would survive without his financial support.”

Unfortunately, her situation is far from uncommon. But the good news is: she can get divorced and still maintain a fair standard of living while she gets back on her feet and starts a career of her own. How? The answer is alimony.

While not a given right, US law mentions that parties in a divorce should be able to live “according to the means to which they have become accustomed.” Meaning, if during the past ten years you made zero dollars while your spouse made $300,000 per year, chances are pretty good that you’ll be able to maintain a decent lifestyle on your own.

The length during which an ex-spouse receives alimony depends on many things, from age (younger individuals are generally considered as having better chances to move on with their lives) to how long the marriage lasted. So while nothing is guaranteed, there is still hope!

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Money Management for Couples: What to Do When Your Opinions Differ

by Stacy Francis, CFP®, CDFA

Something interesting happened in my latest Savvy Ladies telephone conference. When one woman told the group that her husband’s sloppy attitude toward money was so frustrating to her, she wanted to divorce him for this reason alone, every woman in the group expressed their support. Several of the married ones even told her they could relate because they were having similar issues in their marriages.

It is no secret that “financial differences” is one of the most common reasons couples split. While sad indeed, there are things you can do to get past these issues. Below are just a few.

  1. Draft a budget. Sit down together and put your expenses and financial goals on paper. Be realistic, and make sure that sticking to the budget won’t require too much effort. Remember that budgets are like diets – they never work if they’re unrealistic.
  2. Communicate. It is common knowledge that lack of communication rarely solves any problems, yet so many couples fail to talk openly about their financial differences. Approach them in a calm, non-threatening way, and focus on finding constructive solutions that you work for both of you.
  3. Be considerate. Whether you intend it or not, the way you manage your money will affect your spouse as well. Make sure he or she is comfortable with your spending and investment habits.

If this doesn’t work, consider seeing a marriage counselor, a financial planner, or both. They can apply an outsider’s perspective to your specific situation, and hopefully find solutions that will get you past your problems. Remember, you are far from alone.

 

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

The Postnup

by Stacy Francis, CFP®, CDFA

One of the main topics at my latest seminar was prenup’s younger cousin, the postnuptial agreement, or postnup. “I didn’t sign a prenup,” one woman confessed, “and my husband’s spending habits are keeping me up at night. But if I demand that we draft a postnup, he’s going to think I want to divorce him.”

A common dilemma indeed. While postnups still lag far behind prenups in terms of popularity, they do fill a crucial function. Signing one does not mean you don’t trust your partner, or that you are getting a divorce. It is simply a way to take control over your finances. If you are contemplating one, here’s what you should know:

  1. As postnups are newer and fewer cases have been tested in court, they lack the solidity of their pre-marital counterparts.
  2. Child support issues cannot be settled in postnups.
  3. There can be no skeletons in your closet, should you go for a postnup. If it turns out you failed to include (or simply forgot) any assets at the time of the drafting, the postnup will lose its validity.
  4. You only need one lawyer in order to draft a postnup, but you need two to put it into practice.
  5. Postnups can be – and frequently are – used to update prenups. This is great news indeed. As your life together changes, you are not stuck but can adapt to the new circumstances.
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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Marriage and Money

by Stacy Francis, CFP®, CDFA

One of the most common reasons women call me up is that they are dissatisfied with the way their husbands handle finances. They would therefore like to learn more, so that they can take over this crucial part of the household management. I had three of those calls just this morning!

It is true indeed that the topic of money always land near the top in surveys about what makes couples fight – and ultimately split. The good news is, much of this damage is preventable. Even more so if you address the following topics before you walk down the aisle.

  1. Financial goals. What are your expectations for the future in terms of wealth, work-life balance, retirement, etc? Don’t be alarmed if your hubby-to-be’s goals differ slightly from yours. This is normal – and natural. As long as you are aware of where your partner stands, you can make compromises that you are both comfortable with.
  2. Financial freedom. Some couples merge everything from their credit cards and bank accounts to stock trading accounts and Blockbuster cards. Others keep their finances separate to avoid fights about different spending habits. Still others keep a joint account for household expenses, and the rest separate. Find the solution that works the best for you.
  3. Existing debt. In today’s society, few people are completely in the black. A bit of debt is therefore not a red flag, as long as you can craft and commit to a plan to eliminate it.
  4. Risk tolerance. If you prefer CDs and bonds while your husband likes to speculate with biotech stocks, chances are you will end up hating each other before you know it. Find a compromise that works for both of you – and stick to it.
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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Taxes: Should You File Jointly or Separately?

by Stacy Francis, CFP®, CDFA

Even after tax season has come and gone, one of the main topics of discussion at a recent seminar was: what are the benefits versus drawbacks associated with married couples filing separately? An excellent question. However, just like with so many other excellent questions, the answer will depend on the circumstances. Below are a few examples of cases where it may be a good idea to keep this one aspect of your life together separate.

  1. You or your hubby has made little money and had lots of medical expenses. By filing separately, the proportions of the two may work out so that you or your hubby can itemize the medical expenses and save well-needed dollars.

  2. Your partner uses questionable techniques for keeping his tax dollars to himself. While tempting, such actions are illegal, and if you sign the same tax return, you, too, are responsible. If you file separately, your chances of arguing in front of a jury that you didn’t know are much better.

  3. Your marriage is crumbling. If you are fairly certain that your twosome isn’t going to last, you may want to file separately in order to minimize the paperwork you need to do together later. It is also important to file separately if you are concerned that he is not being 100% honest on his tax reporting.

Last but not least, it is imperative that you stay up to date with the newest rules and limits for the different tax brackets. Taxation is a complicated matter – but you do have options. When you add knowledge to the pot, you can make an informed decision.

Should you prepare your own taxes?

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

The Prenup

by Stacy Francis, CFP®, CDFA

Over lattes today, my best friend reported that her friend was finally leaving the husband we all tried to tell her she never should have married in the first place. I am sure that you have a few girlfriends who you love in spite of their husband. Why do nice girls sometimes choose jerk husbands? Ok, I am digressing. This is a topic for another blog…

The friend was devastated by the divorce, my best friend told me, and her only consolidation was that she had made him sign a prenup.

We have all heard this story in one version or another. From A-list celebs to politicians and neighbors, divorces are far more common than we’d like to think they are. Conclusion: while drafting one isn’t exactly like a honeymoon trip to Maui, doing so may save you years and years of agony down the road. But what should be included in a prenup?

Put simple, the prenup should be a summary of how your assets (savings accounts, securities, houses, cars, investment properties along with anything else of monetary value) are to be allocated in case of a divorce. In the absence of a prenup, state laws will make these decisions for you. Though you may consider these laws favorable at the time of the engagement, they are ever changing, and therefore most people are better off settling things on their own. Not because lawmakers aren’t doing a good job – it’s just extremely difficult to generalize when each case is so truly unique.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.