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New Jersey Family Law Blog

How divorce may help save money

Few New Jersey couples look forward to getting divorced. It can be an emotionally draining time for themselves and their children. However, once a divorce is finalized, there may be no one to scrutinize another person's spending or other financial habits. Those who like to save are free to do put their paycheck in the bank or otherwise secure their financial future on their terms.

In addition to gaining control over their money, they may also gain greater control of their investments. This may make it easier to see greater returns in both the short and long-term. Parents of children who are about to go to college may get additional financial help paying for tuition. This is because only the income of the custodial parent is considered when determining how much aid a student may be entitled to.

Unpaid child support and wage garnishment

New Jersey workers whose wages are garnished for child support are more likely to be men than women. A nationwide study by the ADP Research Institute that was released on Sept. 27 found that of the 7 percent of workers who had wage garnishments in 2016, nearly three quarters were men and the majority were for child support. Consumer debt, student loans and taxes were more common reasons for women to have garnishments. Almost two-thirds of people whose wages were garnished were 35 to 54 years old.

Male middle-aged Midwestern workers accounted for many garnishments with 26 percent of men ages 35 to 55 employed by large manufacturing plants having wage garnishments. The average income of this group annually was $44,000. Midwestern and Southern workers were more likely to have wages garnishments than workers in other regions. The study found that goods-producing companies had more garnishments than the service industry, and there are more goods-producing companies in these regions.

Financial mistakes to avoid in a divorce

Many New Jersey couples who get a divorce may be dealing with issues such as property division, alimony and child support. There are a number of common financial mistakes people tend to make around these issues that can be easily avoided if they are aware of them.

It is important to make sure the true value of assets is correctly calculated. For example, a person may decide to keep the home because it is worth the same amount as an asset such as a retirement account. However, in calculating that value, it is important to take into account that the there will costs associated with maintaining the home. Furthermore, a person must be able to maintain the home on one income.

The tax consequences of divorce

New Jersey residents who are ending their marriage should also prepare for the variety of tax implications that this change brings. Being ready for these changes can help avoid some financial pitfalls post-divorce.

The first tax change, the filing status, might seem obvious. Once a couple divorces, they are no longer able to use the married filing jointly or married filing separately statuses. They have to file individually or as head of household if they have dependents living with them. This is true even if the divorce was finalized on the last day of the tax year. A variety of tax breaks will also be affected, as only one person is able to claim the child tax credit and only the person who keeps the house is able to use the mortgage interest deduction, for example.

Study examines link between career fields and divorce

A recent study presented by FlowingData found that jobs associated with science and math tend to have lower divorce rates than those associated with night life or transportation. Some jobs that tend to attract rural populations, including military careers, forestry, farming and fishing, also have lower divorce rates. However, nightlife and travel-related jobs in New Jersey and throughout the U.S. have higher divorce rates.

Jobs such as bartender and gaming manager had a divorce rate higher than 50 percent. Meanwhile, the divorce rate for actuaries was lower than 20 percent. For clergy, it was just around 20 percent, and for physicians and surgeons, it was just above 20 percent. These were all considerably below the national divorce rate of about 35 percent in 2015.

The importance of consistency for children after a divorce

When New Jersey parents of young children divorce, they may want to minimize the contact they have with one another. However, it is important that they work out consistent households rules for their children to follow as they move between households. This consistency is important to the children's well-being. Parents should remain flexible. While they may be unwilling to concede some points, they need to be able to compromise on others. A face-to-face sit down may be the best way to reach this compromise, and children can be included as well if they are old enough. Areas addressed might include video games, bedtimes and how children dress.

Parents who are unable to sit down and negotiate in this way might be able to get help from parenting classes or mediators. These are both unbiased resources. Parenting classes may emphasize the importance of consistent household rules and give parents a sense of what those rules are. A mediator is a person who can sit down with parents in negotiations and help them try to make an agreement.

How to aim for success in mediation

Mediation involves a couple sitting down with or without their attorneys and attempting to create a divorce agreement. It can be an alternative to litigation in many divorces, but it is important for New Jersey couples to prepare for the process in order to have the best outcome. The first step is to get ready for what may be a more emotional experience than they anticipate. A person who has suppressed feelings of anger or sadness might find them coming up in mediation. It is fine to ask for a break in order to regain composure in this situation.

Financial preparation is also important. Concrete numbers and documentation are needed. People should also come ready to listen to one another. Not doing so and preparing a response while the other person is talking will make for a much less productive divorce mediation.

Steps to ensure that alimony is deductible

Spousal support may be an issue in many divorces in New Jersey. When there is a substantial disparity in the incomes of divorcing spouses, judges may order the higher-earning spouses to pay spousal support to the lower-earning spouses for specific durations or for indeterminate periods.

When higher-earning spouses expect to have to pay spousal support to their spouses, it is important that they take steps to ensure that they will be able to deduct the payments that they make. The amounts that are paid in alimony are deductible by the payers and are reportable income by the payees. In order to be able to deduct the alimony that is paid, it is important that it is set up in a way that conforms with the Internal Revenue Service's regulations.

When to choose mediation in a divorce

New Jersey couples who are getting a divorce may want to consider mediation instead of litigation. However, mediation is not the right choice for everyone. For mediation to work, the couple must generally wish each other well. If one person wants revenge, there could be problems in the process.

Both people must be able to advocate effectively for themselves. One issue that often arises is that a person may want something so desperately in the divorce, such as custody of the children, that they will agree to unreasonable terms. Mediation is also not a good idea if the relationship was either emotionally or physically abusive.

Post-divorce finances for women

Women in New Jersey who have gone through a divorce should reconsider how they handle their finances. The household income of a divorced woman drops an average of 41 percent according to information from a 2012 report by the United States Government Accountability Office. This is nearly two times the loss of income a man will sustain after a separation.

A divorce tends to be more financially devastating for women because they generally receive less income than men. The Bureau of Labor Statistics reports that according to average weekly income data, women earn only 82 cents for each dollar men make.

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