Your Divorce Mediation Coach – Part I

       All mediators recommend (or should recommend) that you get your own individual legal advice as a part of the divorce mediation process.

       You may ask why this is necessary since you are mediating your divorce in part to “avoid divorce lawyers”. Won’t hiring separate attorneys defeat the goal of mediation to save costly attorney fees? Isn’t a qualified mediator, who is being paid for “knowing his or her stuff” all the professional advice you need?

        Even though mediation is about cooperating to work out financial and parenting issues, each spouse has individual concerns, and legal rights and responsibilities. Mediators are neutral parties and do not give legal advice to either spouse, even though the mediator may be a trained and/or licensed as an attorney. The settlement decisions you make as a part of your divorce should be based on “informed consent”. Working with your own attorney helps to protect you and achieve your mediation goals by:

        ● Understanding the law and identifying legal issues that may apply to you;
        ● Having a private place to discuss your concerns and weigh your options;
        ● Getting support from a legal professional who is “in your corner”;
        ● Diagnosing how much information is reasonably necessary for you to make your settlement decisions;
        ● Getting practical feedback on your ideas for settlement and creative suggestions about difficult issues;
       ● Having the knowledge that an attorney has helped to protect your legal interests by reviewing the final legal settlement agreement before you sign it.

        Despite what many people believe, mediation is not only for “friendly” spouses. Couples less prone to uncontrolled conflict are particularly suited for mediation. Couples separated long enough to have survived their “emotional divorce” are usually better able to mediate in a constructive and calmer environment. While some couples who elect to use nonadversarial approaches can act civilly, most people going through divorce are experiencing extreme emotional distress. However angry, fighting, grieving and otherwise emotional people can still share the goals of avoiding the adversarial process and protecting their children from parental conflict and emotional damage from the divorce.

So, you can be consistently “unfriendly” throughout the process and yet avoid adversarial approaches. The more grounded you are with private legal information and advice, the less likely that you will question your settlement decisions later no matter where you and your spouse are on the “friendliness – high conflict” continuum.

          Consider your work with an attorney as your investment in feeling confident about some of the most important decisions you will make in your life.

Oh the divorces!

Oh the Divorces

Tracey Thorn released this song to begin her new album in April, but somehow its only now caught up with me … worth a listen …..

What are the limitations on home mortgage deductions?

Guest post by Joseph DeCusati, CPA, ASA, CFE – Senior Business Valuation Analyst  – Meyers, Harrison and Pia

In some divorces, particularly with a high net worth, all of the mortgage interest of the individual may not be deductible. IRS Publication 936 offers specific guidance in that regard. On page 3 of IRS Publication 936 is a chart that illustrates whether it is necessary to consider this limitation on the mortgage interest deduction.  Tthis chart can be confusing, so this article attempts to clarify the rules related to this limitation on the mortgage interest deduction.

Home mortgage interest is a tax-deductible expense.  Mortgage interest is reported on Form 1040, Schedule A along with other itemized deductions such as real estate property taxes, medical expenses, and charitable contributions.
Mortgage interest includes interest you paid on loans to buy a home, home equity lines of credit, and construction loans.  The amount you can deduct may be limited, however.  A taxpayer can only deduct interest paid on the main home and a second home.  Interest paid on third or fourth homes, for example, is not deductible.

You need to meet the all the following requirements in order to deduct your mortgage interest:

1. You must file Form 1040 and itemize deductions on Schedule A.

2. You must be legally liable for the loan.  You cannot deduct payments you make for someone else if you are not legally liable to make them.  Both you and the lender must intend that the loan be repaid.  In addition, there must be a true debtor-creditor relationship between you and the lender.

3. The mortgage must be a secured debt on a qualified home.  A qualified home is your main home or your second home.  According to IRS Publication 936, a home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.

Recordkeeping. You should receive a Form 1098, Mortgage Interest Statement, from each mortgage lender.  This form reports the total interest that you paid during the tax year.  The financial institution will also send a copy of Form 1098 directly to the IRS.  Make sure that the mortgage interest deduction you claim on Schedule A matches the amounts reported on Forms 1098. The amount you can deduct may be less than the amount you paid, based on limitations of the mortgage interest deduction.

Home acquisition debt limit.  The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately).

Refinanced home acquisition debt.  Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt.  However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing.  Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt.

Mortgage treated as used to buy, build, or improve home.  A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. This applies in the following situations:
1. You buy your home within 90 days before or after the date you take out the mortgage.  The home acquisition debt is limited to the home’s cost, plus the cost of any substantial improvements within the limit described below in (2) or (3).

2. You build or improve your home and take out the mortgage before the work is completed.  The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage.

3. You build or improve your home and take out the mortgage within 90 days after the work is completed. The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage.

Home equity debt. If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt.  In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit, may qualify as home equity debt.

Home equity debt is a mortgage that:

1. Does not qualify as home acquisition debt or as grandfathered debt, and

2. Is secured by your qualified home.

Home equity debt limit.  There is a limit on the amount of debt that can be treated as home equity debt. The total home equity debt on your main home and second home is limited to the smaller of:

1. $100,000 ($50,000 if married filing separately), or

2. The total of each home’s fair market value reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt.

It is important to note that all of the information above assumes a mortgage initiated after October 13, 1987.  Such mortgages prior to that date are subject to additional rules not addressed above.

On-Line Parenting Education

Connecticut requires parents in divorces and other family  matters involving children to take a mandatory parenting education course. The six hour course is designed to educate parents to help the children adjust to their changing family situation in a healthy way.         
The course includes:

Information about children’s developmental stages and how divorce impacts children differently depending on [...]

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Medicare – Where to get information and help

On January 21, 2010 I attended a talk, “Medicare and You: DeCoding the Plan” sponsored by The Transition Network in New York City.
The speaker was Susan Batkin, Director of Casework at the Medicare Rights Center. Her presentation was very informative as she sorted out the morass of Medicare, Medicaid, Medicare Prescription Drug plans, Medigap, and [...]

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What is a Divorce Coach and Why Would I need One?

Guest post by Linda A. Keller,  LCSW,  LMFT
“He is furious that she introduced the kids to her boyfriend and he is digging in his heels.”
“She won’t meet with him in the same room and the case is about to blow up.””Their original parenting plan had no specifics, and they fight with each other like alley [...]

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New Standing Orders for CT Divorce Cases

Divorce mediation and collaborative professionals should be aware of ew standing orders in Connecticut divorce cases effective December 1, 2009.
Each new divorce case in CT is assigned a Case Management Date. The parties to the case need to report the status of the case to the court by that date: ready to [...]

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Payment of College Expenses – Blanchard v. Blanchard

Blanchard v. Blanchard 47 Conn.L.Rptr. 90 (1/14/09)
ISSUE: Payment of college expenses.
FACTS: The parties agreed to share equally college expenses (defined in the agreement) for their children not to exceed the cost of UCONN. The agreement included the following provision:
“All grants and scholarships … shall be applied first towards such college expenses and the balance equally assumed by the [...]

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Division of Defined Benefit Plans – Chen v. Chen

Chen v. Chen, 47 Conn.L.Rptr 195 (2/17/08) – Hartford Superior Court
ISSUE: Division of defined benefit plans.
FACTS:
1) The parties’ dissolution agreement included the following clause:
The parties shall divide the total balance of their retirement accounts with the Plaintiff retaining 50% and the Defendant retaining 50%. The agreement failed to provide a date of valuation and failed to address what [...]

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Approaches to Divorce

“Kitchen Table Negotiation”
The spouses negotiate the terms of their own divorce settlement. The parties can either fill out the Dissolution Agreement form provided by the court on their own (not recommended) or one party can hire an attorney to prepare the agreement and the other documents needed to finalize the divorce. The divorce agreement is [...]

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