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Tag Archives: family law software
If divorce property settlement was easy, then people wouldn’t need attorneys. Fortunately for the family law industry even amicable divorces can get difficult when trying to figure out just how much each person deserves. Most assets can be valued pretty easily: the balance in a savings account, the Blue Book value of a car, or an appraiser’s evaluation of a set of jewelry. However some assets, such as pensions, are more complicated.
Note we are talking about pensions and not retirement accounts–defined benefit plans rather than define contribution plans. A retirement account can be valued by simply looking at the balance on a certain day. However pensions, due to the fact they are paid monthly from retirement until death, can’t be evaluated quite so simply. For equitable distribution the divorce software must be able to consider several important factors.
- Coverture Factor — How much of the pension was earned during the marriage? A spouse is typically not entitled to pension value earned before the marriage date. At its simplest the coverture factor is (marriage years) / (pension years). So if one spouse has been paying into a pension for ten years and the couple has been married for eight years then the ex would be entitled to a portion of 8 / 10 = 80% of the pension.
- Life Expectancy – The value of a pension is ultimately the total value of the payments that will be made over the lifetime of the retiree. No one can predict how long someone can live but estimates can be made based on typical life expectancy. Two common life expectancy charts used in divorce planning software are UP-94, which is based mostly on the life expectancy of federal civil servants, and RP-2000, which is based on a larger population. Attorneys must also decide whether to use gender-specific or unisex tables.
- Interest Rates – The rate is used to determine the present value of future money, adjusting for changing value of the balance over time. Not only must a reasonable value be chosen but attorneys must also decide whether to use the same value or different values for pre- and post-retirement years, as people typically invest more conservatively after retirement than before
- Cost Of Living Adjustment – Will pension payments automatically be adjusted for the cost of living? If so this must be entered into the divorce legal software so it can correct for the true payments over the retiree’s lifetime.
Pension value calculations are complicated but can be handled at the click of a button when using fully-featured family law software like Divorce Financials. Download a demo of any of our family law legal management software tools and discover how much faster and more accurately you can calculate fair divorce settlements.
Divorcing couples are often surprised to find out that their assets are not simply divided down the middle. Most states require that martial assets be divided equitably not necessarily equally, a distinction that can complicate divorce proceedings. Each spouse has a different idea of what “equitable” means and that is why attorneys use divorce settlement software to create multiple divorce scenarios. Several issues complicate property division.
What’s Mine Is Yours…Except When It’s Not – Most assets obtained during the divorce are considered jointly owned. However gifts given to one spouse might be considered that spouse’s individual property and not subject to property settlement. Unfortunately the situation is not always clear. For example if a spouse receives an inheritance that would normally be separate property, but if that inheritance is deposited in a joint account it may be considered a joint asset.
I Love Our Dog More Than You Do – Family pets are often fought over as much as the children are. For an average mutt this is merely an emotional issue, but a purebred animal might also have a significant monetary value. Even if the dog is considered the family pet, if one spouse shouldered the burden of responsibility for the animal’s care that spouse might be considered to own more than half of the animal.
You Cheated! – Spouses are often surprised to find adultery, abuse or other behaviors don’t affect division of assets. However there is one kind of cheating that will be a factor and that is financial fraud. If a spouse’s actions affected the family’s finances the court might award the other spouse a larger percentage of the estate.
We could go on but you get the idea. Family assets are more than just numbers to be entered into family law software, totaled and divided by two. The more complex the situation, the more difficult it is to get a resolution. It’s generally the best for all parties if some agreement can be reached without having to resort to a judge’s order that is likely to leave both spouses feeling cheated.
Divorce software for attorneys allows lawyers to present multiple scenarios to the opposing party. By putting a personal value on certain assets and by working with their clients to decide what can be sacrificed and what must be saved, they can boil the complex property division into several offers.
Family law offices that use settlement statement software are able to reach settlements more quickly, and find solutions that are fairer to their clients. Download a demo of our law firm software to see all the features we provide to the modern family law practice.
Property division in a divorce is difficult even under the best circumstances but is often complicated by the raw emotions brought out by dissolving a long-term relationship. Family law attorneys use divorce software to create an objective division of assets but often it’s not that simple.
One of the big questions is: who gets the house? When one spouse gets primary custody of the children, that parent usually gets the house as well but what if there are no kids or the custody is split 50/50? The house is not simply an asset with a price tag. It is a home, a place to live, a source of good and bad memories and so much more. Yet the attorneys have to objectively price the property in the divorce settlement agreement and compensate the other spouse with assets of equal value. Sometimes a spouse is even willing to give up more than the house is worth because of the sentimental attachment.
Another big sticking point in divorces is retirement. If one spouse worked and contributed to a 401(k) account, does that spouse get the full asset? A court might rule that the income was for the family rather than the individual so the retirement might be declared a joint asset. That could leave the working spouse, especially if nearing retirement age, without enough money to stop working. Family law attorneys need divorce settlement software capable of presenting various scenarios evaluating the house, retirement and other assets so they can quickly find the solution that satisfies both parties.
Today’s attorneys need even more flexibility than before. If they are tied to family law software installed back at the office then they aren’t in a position to negotiate on the fly. They can’t evaluate complex settlements including multiple assets when an offer is made, and can’t seize on opportunities that might arise during divorce negotiations.
Cloud versions of Easy Soft’s family law attorney practice management software can be used anywhere the lawyer can get internet access. The attorney has full access to a client’s files and can generate settlement offers at a moment’s notice. This provides a big edge during negotiations.
Find out more about how Easy Soft products automate your practice and give you the opportunity to practice law without the limitations of other software tools.
Alimony, or “maintenance” as it’s called in New York State, is traditionally in the form of monthly payments. However many couples choose to negotiate a lump-sum buyout instead. The payor gives the payee a single large disbursement instead of monthly payments over the next several years. Although the total amount in a buyout is less than the payments would total to, many recipients are better off accepting such an offer.
First let’s understand why a lump sum is a smaller total amount than the monthly payments calculated by the New York spousal maintenance formula. A dollar today is worth more than a dollar tomorrow so the payout amount has to be adjusted for inflation. In addition a lump sum can be invested, potentially providing monthly income for the rest of a person’s life so it is a source of future earnings. Even though the lump sum is a smaller number, it will have the same long-term buying power as the individual payments.
One of the leading reasons spouses accept maintenance buyouts is immediate need. Sure it’s nice to have a reliable monthly income–assuming the ex is reliable but that’s another issue–but that doesn’t help pay off large bills right now. Job loss, medical bills, car accidents or other disasters can leave a person with enormous debt. It is better to pay off the loan immediately rather than run up massive finance charges as payments chip away at the sum over years.
The buyout can be advantageous for the payor in a divorce settlement as well. Yes, it can be a short-term hardship to raise that much money. However if the payor aggressively works to replace savings or pay of loans taken to meet the obligation, it can mean less money paid out in the long run. Many people would rather make monthly payments to a savings account or a lender than to write a check to an ex, so the emotional cost is lower as well.
Family law attorneys use divorce settlement calculators to determine a fair buyout amount. These calculators take into account the monthly payments and the length of the maintenance agreement to find a base value, and then adjust that for inflation. The further in the future a given payment is the smaller effect it will have on the buyout amount. It’s harder to determine a fair lump sum for maintenance agreements with no end date, though it can be done.
Contact Easy Soft, a provider of law practice management software for over twenty years, for more information regarding how our family law software can provide an unbiased analysis of a current maintenance agreement and calculate a fair lump sum settlement.
You never realize how much junk you’ve acquired until you have to move. You find a dozen matchbooks with one match left each, an 8th-grade history paper you got an A+ on, that weed whacker you never returned to the neighbor who moved away two years ago, and the $2.37 in change that fell out of the couch. You had no idea you had so much stuff.
Divorce is kind of like that.
Couples are often stunned by how many assets they have, and yet when preparing fair divorce settlements it is essential that attorneys know about every single item of value. It’s easy to forget about that rainy day account because you haven’t touched it in years, or your grandmother’s ring that has great sentimental value but also a certain amount of tangible value, or the 5 shares of that fruit-named computer manufacturer your parents bought when you were born in the late 70s–I wonder if the company ever got successful.
Couples ignore the real value of these assets because, unless you are selling something, you don’t really care about its dollar value. However once you are embroiled in a New York state uncontested divorce these assets suddenly matter. Sure the wife might not want the husband’s collection of classic comics, but if they have value then he has to reimburse her for her share, ideally with some asset he has no sentimental attachment to.
It’s not only the expensive items that matter. A trinket here and a souvenir there and suddenly the couple has several thousand dollars worth of assets they wouldn’t have considered counting otherwise. No, the couple doesn’t have to document every pair of sneakers and cereal box prize, but they do need to make a realistic estimate of the net worth of all of their assets, especially easily-valued assets such as investments, loan receivables and pensions.
The same need for thoroughness applies to liabilities, but people are often more aware of what they owe than what they own, plus most debts show up on a credit history so these are easier to track.
Family law attorneys should prepare asset checklists to be completed by the client. Having the client do much of the work saves time and money in the long run, and people are better able to find their own assets than a stranger would be. Once the checklist is returned, the attorney can easily enter the information into divorce settlement software for fair property settlement calculation.
Easy Soft’s law practice management software may not be able to automatically inventory a client’s household for you, but it does takes a lot of the other drudgery out of family law practice. Less work for you means more clients and greater profits, so upgrade to Easy Soft family law software today here .
One of the few advantages of paying alimony is that the money is tax deductable. That may not take the all the sting out of New York state spousal support but it eases the pain a little. Unfortunately that pain can come back redoubled when the payer gets a polite letter from the IRS saying taxes are owed on alimony from previous years. That’s the joy of alimony recapture.
The IRS keeps a close eye on tax deductions to ensure that nobody is using them inappropriately. If alimony payments decrease rapidly over the first three years after the divorce, the IRS may come back and disallow the tax deduction. This is because some unscrupulous people–not you of course–try to disguise divorce property settlement payments as alimony to avoid paying taxes.
Of course there are legitimate reasons that spousal support will decline and as long as one of the conditions apply, there won’t be any alimony recapture. For example the payer might be self-employed so alimony payments fluctuate as the business income varies. As long as the condition is included in the divorce settlement agreement then the IRS will go away happy–and empty-handed.
Then again sometimes the spousal support agreement is renegotiated after a change in one spouse’s financial status and this can trigger recapture. Attorneys can use family law software to calculate the effect of alimony recapture to help both parties determine if the change if alimony is financially advantageous. It might actually be cheaper to continue to pay the higher support amount to avoid triggering recapture.
Family law attorneys should explain recapture to their clients, especially if the client is the one paying support. This prevents any future IRS action from coming as a surprise. Payers shouldn’t get upset if they are notified of recapture action, especially if they can demonstrate the change in alimony falls under one of the exceptions listed under IRS regulations.
Spousal support is a complex calculation and, as you can see, the calculations aren’t over just because the divorce decree is signed. Stay on top of all your divorce cases, past and present, by using legal practice management software that documents all details as well as calculating spousal maintenance, child support, and the effect of possible recapture action.