DIVORCE BASICS: Planning When the Unplanned Happens.

No one likes to think about divorce. That it happens means thata very important part of one's life did not go as planned. Whenit does happen, however, there is absolute and immediate needfor a plan--divorce financial planning. While divorce is neveran easy process, effective divorce planning can mitigate some ofthe pain and confusion involved that may affect you for the longterm. Divorce proceedings and Marital Settlement Agreements (MSAs) areoften complicated. Drafting your MSA--the document that willidentify and divide affected property and outline provisions forcustody and child support--is a key step in any divorce, onethat many couples execute poorly. The repercussions from doingso can affect you for the rest of your life. There are basicsteps, terms, and intermediaries that can help make your divorceplanning less stressful: 1. Self-help guides Some financial situations render legal helpunaffordable. There is plenty of literature available devoted todivorce planning. Remember though, an MSA is probably thelargest financial transaction of your life--consulting someonewith education and expertise is advisable. 2. Paralegals Whilethey can file your divorce papers with a court, they CANNOT givelegal advice. 3. Mediators Attorneys, judges, or other qualifiedprofessionals that work with couples seeking an out-of-courtsettlement. Mediators do not go to court or handle litigatedmatters. Check with your local Bar Association for a list ofFamily Law Specialists and Mediators: a majority offers freeconsultations (usually lasting 30 minutes). 4. LitigationAttorneys Litigation attorneys help couples that can't reach anamicable settlement by preparing their case for a hearing beforea judge. 5. Certified Family Law Specialist An attorney who hasspecialized education and expertise in family law--in many casessuch specialists are best when taking your case to trial. 6.Certified Divorce Planners CDPs mediate the financial aspects ofan equitable divorce settlement, generally working inconjunction with a Family Law Attorney. 7. Collaborative LawInvolves a team approach where two attorneys (one for eachparty), two mental health coaches, and one financial advisorassist in determining a settlement. All members of the team signa statement agreeing to work together in keeping proceedings outof court and preparing an MSA that is fair for all involved.MEDIATING * Mediated cases generally cost 10% that of litigatedcases * Mediated divorces are settled as quickly as an agreementis established * In many states, divorces are final after a sixmonth separation periodvs.LITIGATING * Litigated divorces usually require a startingretainer of $10,000 * Eventual fees drive costs up by tens ofthousands of dollars * In-court divorce proceedings can carry onfor more than two years Dividing assets is tricky territory as regulations vary fromstate to state. Some states treat income earned during amarriage as community property--regardless of who earned it.Anything purchased with community property funds is owned by theparties equally. In the event of a marriage dissolution, assetsare divided between the parties. The division that you shouldseek should be the best one for both spouses--you may decide onsomething other than a strict 50-50 distribution if it is betterfor the family as a whole.Retirement accounts can be kept by whomever's name appears onthe account. If a couple prefers to divide a pension, a courtorder called a Qualified Domestic Relations Order (QDRO) isrequired to do so. Banks can transfer IRA account funds withouta QDRO.The final, most stressful divorce issue involves thedetermination of child support. Remember these primaryconsiderations: * Spouse income * Percentage of time spent with children * Stateand Federal taxes for each child * Health insurance costs foreach childChild support is not tax deductible to the payer or taxable tothe recipient. California has a child support guideline that canbe determined by using any certified support calculationsoftware program. Computer calculations do not provide a readyanswer for spousal support or alimony. Alimony is based on theneeds of the supported party and the other party's ability topay. Alimony is tax deductible to the payer and must be includedas taxable income on the recipient's tax return. A combinedpayment known as family support is treated the same as spousalsupport. Obtaining a life insurance policy for both spouses (toinsure continuing support should a parent die prior tocompletion of his or her support obligation) is also anadvisable step.Never underestimate the decisions made while planning andproceeding with your divorce--they will affect all aspects ofyour life for years to come. Do what you can to make thoseramifications positive. There is so much to divorce than signingpapers and dividing assets. If "happily ever after" is not yourending, a comprehensive understanding of your rights andobligations can at least make it "happy after the fact."Education and awareness is key to making the most out adivorce's unfortunate circumstances.