Have You Ever Prepared an Expense Statement?

            I can’t cite any statistics, but I can confidently say that based on my experience, very few people have ever prepared a budget or an expense statement.  That means for most people, their income comes into their bank account and they pay their bills from their bank account, but they don’t really have a firm grasp on their monthly expenses and where their money is going.

             Expense statements can be helpful in everyday life, to understand your cash flow and itemize your expenses and have a relatively accurate overall picture of your spending habits and your financial needs.  Unless your monthly finances are unbelievably simple, I don’t know how you could have an accurate picture of your expenses without preparing an expense statement.

             Expense statements can be essential in divorce situations.  The two big financial decisions involved in divorce can be influenced greatly by your monthly expenses.

             First, how will your assets and liabilities be divided?  Without knowing what to expect for your income and expenses, you cannot make informed decisions about what assets would benefit you most.  Is it better to keep assets that have no liabilities associated with them, or retirement assets that produce future income or assets that produce immediate income?  What about liabilities?  Can you afford to keep your house, considering the expected expenses and maintenance costs?  If your liabilities are going to be divided, what can you afford to be responsible for?  Do you have room in your monthly budget for loan or credit card payments?

             Second, how will you meet your expected monthly expenses?  Do you have adequate income?  Do you need to find more income?  How about cutting some expenses?  Do you or your spouse need financial help from the other to meet monthly expenses?  What better way for either of you to demonstrate to the other that you need financial help than by documenting your income and expenses?

             Expense statements don’t need to be intimidating or complicated.  You can probably find samples online for general use and if you’re familiar with Excel or other spreadsheet programs, they can be pretty simple to prepare.  If you’re involved in a divorce situation, your attorney probably has paper forms or Excel spreadsheets with expenses listed, so you just need to fill in the numbers.  In fifteen minutes you could probably sit down and list the majority of your monthly expenses to prepare a basic expense statement.  However, with your attorney’s help and the use of forms, you can probably prepare a much more comprehensive expense statement in less than an hour.  It’s worth the time and effort.

             If you live or work in the central Pennsylvania area, including Carlisle, Harrisburg, Hershey and surrounding communities and would like to discuss budgets, expense statements or any other family law or estate planning or administration issue, please contact me.

Alternative Dispute Resolution Methods

“Alternative” refers to alternatives to litigation (the court process). If you need to resolve a conflict, but don’t want to go through the court process (I advise avoiding court if possible!) then you have alternatives to consider. I strongly recommend alternative dispute resolution methods to my clients for divorce and other family law conflicts. This is not an all-inclusive list, but you can consider the following: 1) sit down and reach an agreement on your own; 2) mediation; 3) collaborative law; and 4) arbitration.

Reaching an agreement on your own can save a lot of time and money, but it is not realistic for most divorcing couples because they are unable to effectively communicate. It can also be legally hazardous. It’s great if divorcing spouses can communicate effectively and address dividing their assets and debts, providing financial support and making parenting arrangements (custody) privately. Even if no attorneys or other third persons are involved in the negotiations, both spouses should get independent legal advice before signing any agreement. I have worked with divorce clients who entered into an agreement prepared on their own or downloaded from the internet (Bad Idea!) that ended up not saying what they wanted it to say or thought it said. It is more costly and time-consuming to challenge an agreement afterwards than it is to do it right the first time.

Mediation is a great way to have a neutral third person (the mediator) help spouses have the difficult conversations necessary to resolve their divorce and related financial and parenting issues. There are high quality mediators available in central Pennsylvania, including Carlisle, Harrisburg, Hershey and surrounding areas. I conduct private divorce and other family law mediations and also recommend mediation as an alternative for my divorce clients. Both spouses should be represented by attorneys in the mediation process to get private legal advice.

Collaborative law is an organized, effective process designed to help spouses resolve their divorce and related financial and parenting conflicts in a private, respectful manner. Clients and their collaboratively trained attorneys meet with an agreed-upon agenda to systematically make decisions based on their interests and concerns. I am collaboratively trained and encourage my clients to use the collaborative process if both spouses are interested in a mutually acceptable divorce resolution. Central Pennsylvania, including Carlisle, Harrisburg, Hershey and surrounding areas, has a thriving community of collaboratively trained attorneys.

Arbitration is a private litigation process, where the spouses choose the decision-maker and present their respective sides of the divorce conflict to him or her through their lawyers. Arbitration is often used in conjunction with mediation, where spouses agree to mediate their divorce and related financial and parenting issues and give the mediator the authority to make decisions as an arbitrator if they are unable to come to an agreement.

If you live or work in central Pennsylvania, including Carlisle, Harrisburg, Hershey and surrounding areas, and would like to discuss alternative dispute resolution methods for divorce or any other family law issue, please contact me.

Basics of Collaborative Law

Collaboration means to work together to achieve a common goal. The collaborative process involves the spouses, their attorneys and any other involved professionals engaging in non-confrontational sessions to discuss the issues and goals of the involved individuals. The issues may include divorce, support of a spouse and/or children, how to divide the marital assets, co-parenting plans and anything else that spouses need to decide.

The collaborative process involves spouses interacting directly to reach a negotiated settlement through a series of four-party conferences. The parties and their attorneys agree that if they are unable to resolve their issues through negotiation, the attorneys involved in the collaborative process will not participate in any future litigation.

The attorneys work together with the goal of reaching a negotiated agreement and listen to both spouses. The collaborative team focuses on the same goal. Even with this team approach, each individual can also feel confident that his or her attorney represents only him or her. Individuals can rely on their attorneys for advice and guidance with the assurance that the attorneys are also working toward the parties’ single goal – a negotiated resolution.

Collaborative attorneys have specialized training and assist the parties in defining their issues, gathering the information needed and offering creative solutions. The collaborative process usually results in a quicker resolution than the litigated alternative and can be less costly.

Everyone commits to good faith negotiation in a respectful and constructive manner. The parties and their attorneys also commit to full disclosure of information that is relevant to the spouses in their decision-making. If the parties successfully negotiate a resolution it will be reduced to a written contract that can, if necessary, be enforced through the courts.

The collaborative process can help the parties maintain a cordial relationship once the divorce and/or other issues have concluded. This is especially important when there are children involved. Children learn how to conduct themselves primarily by watching their adult role models, especially their parents. Demonstrating to your children that adults can address tough problems with respect and dignity to reach a negotiated resolution is an invaluable lesson for them.

If you are in need of assistance in dealing with family-related issues, including separation or divorce, you should carefully consider the process by which you will resolve all the issues that will arise and whether the collaborative process can meet your needs. The way in which you deal with these difficult situations may impact you and your family more significantly than you can imagine. If you would like to discuss the collaborative process and its use in central Pennsylvania, including Harrisburg, York, Carlisle and surrounding areas, or any other family law issue, please contact me.

My Neighbor’s Divorce

Most of us have heard about or personally witnessed other people (neighbors, family members, friends etc.) going through the divorce process. Whether those observations or reports were positive, negative or somewhere in between, each person’s situation is unique.

There are some basic common elements to all divorces. Everybody gets a piece of paper from the court saying they are no longer legally married. Everybody must divide their assets and liabilities in some manner. Everybody must resolve how each spouse will meet their expenses and whether any support (child support, spousal support, alimony) will be paid. If they have children, parties must make appropriate parenting arrangements (custody).

Beyond those common elements, the specifics of how a divorce proceeds and ultimately is resolved are unique for each individual. You should not listen to tales of other divorces and assume that those stories will apply to your situation. Most clients come to me with some preconceived notions about how the divorce process works based on information from friends, family and coworkers. Most of those preconceived notions are partially or entirely incorrect and part of my job is to educate my clients about the realities of the divorce process.

It is extremely important that individuals not make any decisions about a divorce or ending a long-term relationship before getting competent legal advice. The time and expense paid for an initial consultation with an attorney (preferably me) is well worth the value of making informed decisions about whether to proceed with a divorce and if so, how best to do so. The stories we hear about divorces are usually not the whole story. The divorce process can be very fact-specific and is unique for every individual. The divorce process can also be influenced greatly by how individuals choose to go through it. The experience of an individual using an alternative dispute resolution method such as the collaborative process or mediation will be much different than the experience of an individual using litigation (the court process).

Don’t assume that the stories you hear from others about their divorce experiences will necessarily apply to you. If you would like to discuss this topic or any other family law related issue, please feel free to contact me.

Divorce and Homemakers

You’ve taken care of the house, your spouse, the kids, the pets and pretty much everything else involving your family’s home life. You’ve supported your spouse in his or her career decisions, relying on the partnership you’ve built so that he or she provides most or all of your family’s financial sustenance and you provide the daily caretaking. You’re a homemaker, a stay-at-home parent, a supportive spouse, whatever name you want to adopt. Now you’re getting divorced and you have to adjust to huge changes in your financial and personal expectations. No matter if you’ve initiated the divorce or your spouse has, or if you jointly decided it was the right change for your family, you have a lot of decisions to make.

Before you make any decisions or changes, you should meet with an attorney. The time and expense of an initial consultation will be worth it if you are then able to make more informed decisions. You probably have a lot of questions about how your role as a homemaker during your marriage impacts the resolution of your divorce. It can impact the division of your assets, your income and expenses decisions (child and/or spousal support) and the resolution of your parenting arrangements or custody decisions.

Homemakers contribute greatly to the overall health and welfare of their families. They make valuable contributions throughout a marriage or long-term relationship and those contributions should be considered when that marriage or relationship ends. Under the Pennsylvania Divorce Code, homemakers’ contributions are considered in the litigation (court) process. Those contributions are also considered outside of the litigation process when using alternatives such as mediation or the collaborative law process to resolve divorce issues.

I’ve heard it said that since one spouse did not work outside the home during the marriage, he or she did not financially contribute to the family and should not receive a portion of retirement assets or other marital assets upon divorce. I’ve also heard it said that upon separation or divorce, a spouse who did not work outside the home during the marriage should immediately be expected to obtain full-time employment and support himself or herself. In my experience, these blanket statements are unrealistic in divorce situations. I believe both spouses are better off discussing the practical reality of their financial situations with their attorneys using an alternative dispute resolution method such as the collaborative law process or mediation to arrive at a mutually agreeable outcome instead of sticking to such unrealistic positions.

If you would like to discuss this topic or any other family law related issue, please feel free to contact me.

What am I Entitled to?

A lot of clients come to me with the overall question of “What am I entitled to?” In most cases, they mean “What can I expect the financial outcome to be if I get divorced?” and I can appreciate their anxiety about the possible outcome. I like to emphasize that the ultimate outcome of their divorce will be 1) a piece of paper from the court declaring that they are no longer married; 2) a division of their marital assets with their spouse; 3) a resolution of their income and expense situations so they know how they’ll meet their expenses going forward; and 4) if they have children, some schedule for their children to share time with both parents.

The big question is how you will get to that resolution. I like to tell clients that they are entitled to engage in a respectful, private decision-making process in which the spouses maintain control over the ultimate outcome of their divorce. There are several processes available by which that can be accomplished, including mediation and the collaborative law process. It’s a matter of how both spouses choose to engage in the divorce process.

If spouses choose to use the court process, I can and will explain how the PA Divorce Code instructs courts to divide marital assets, make alimony determinations, decide when to enter a divorce decree and all the other issues that go along with getting divorced. I can and will explain how the Domestic Relations office calculates child support, spousal support and alimony pendente lite. I can and will explain how the PA Custody Act instructs courts to decide the issues of legal and physical custody for children. I will also advise clients that it’s never too late to make these decisions themselves instead of having a third party make the decisions for their family.

I’m never able to give clients a simple answer to this question because every individual’s situation is different. I can always give clients a “ballpark” estimate of how I expect their situation to resolve, but I emphasize that I would prefer to work with them to determine their own destiny instead of having someone else make that determination.

Using the Domestic Relations Rules

The Domestic Relations child and spousal support guidelines deserve special mention here. Talk about a one-size-fits-all (or none) solution! The PA support guidelines are based on both parents’ net monthly incomes, with virtually no consideration for the parents’ or children’s actual expenses or needs. The guidelines are necessary for deciding the sheer volume of support cases throughout the state, because the available conference officers don’t have the time or resources to tailor support solutions for each family. But that doesn’t mean the support guidelines are the logical solution for all families.

The support guidelines are a default rule to be used if the parties can’t reach an agreement. There’s no magic to the guideline formulas. Child support is based on statewide statistics. Spousal support and alimony pendente lite are based on a formula. Just because they exist doesn’t mean they’re right for everybody. If the guidelines changed drastically tomorrow, would those new guidelines suddenly be right for everybody instead of today’s guidelines? I don’t think the new formulas would be any more “correct” than the old formulas.

I suggest using the domestic relations guidelines (and the domestic relations office, for that matter) only as a last resort, if you’re absolutely unable to reach an agreement. I’ve seen many clients spinning through the revolving door of the domestic relations office, attending one conference and court hearing after another, steadily and surely increasing the level of animosity between the parties and the amount of money they spend on attorneys’ fees, without much to show for their efforts.

In my opinion, parents, spouses or partners are much better off reaching a mutually acceptable support agreement based on their incomes, expenses, needs and unique circumstances instead of using the one-size-fits-all guidelines. This is not meant in any way as a derogatory comment on the hard-working individuals who work in the domestic relations offices. I admire the work they do and I’m very glad they do it. I just think they should have less work.

If you would like to discuss the use of domestic relations guidelines in central Pennsylvania, including Hershey, Harrisburg, Carlisle and surrounding areas, please contact me.