Liz Weston: 5 divorce mistakes that can cost you

This April 2017 file photo provided by NerdWallet shows Liz Weston, a columnist for personal finance website NerdWallet.com. (AP)
Updated 29 January 2019

Liz Weston: 5 divorce mistakes that can cost you

  • With a traditional divorce, people may dig in their heels and have to turn to a judge — sometimes repeatedly — to decide issues as they’re negotiating an agreement

SAN FRANCISCO: If you’re getting a divorce , it pays to keep quiet on social media, says New York divorce attorney Jacqueline Newman. Trashing a soon-to-be ex or boasting about your great new life can complicate divorce negotiations.
One client’s husband, for example, insisted he couldn’t afford a proposed settlement. Then, he inadvertently gave Newman leverage to get a better deal.
“He bragged (on social media) about the great vacation he just took and the big deal he just closed,” Newman says. “And I said, ‘Thank you very much.’“
Oversharing isn’t the only mistake people make when their marriages are ending. Here are four more that can have significant financial consequences.
NOT GETTING ALL THE PAPERWORK
You may not know that you need certain documents until years down the road, when your ex may be unwilling or unable to provide them, says David Stolz, a CPA and personal financial specialist in Tacoma, Wash ington, who is active in the American Institute of CPAs. While you can, gather paperwork that shows:
— Account numbers and balances for all of your financial accounts.
— Social Security statements showing your spouse’s earnings record and expected future benefits.
— Amounts paid for major assets, including your house.
— Receipts documenting home improvements.
These documents may help not only with the divorce settlement but with future retirement and tax planning, Stolz says. For example, someone who was married for at least 10 years may be able to claim spousal or survivor benefits from Social Security based on an ex’s earnings record.
IGNORING TAX CONSEQUENCES
Investments, property, retirement accounts and other assets may have the same face value now, but trigger different tax treatments later — and that can dramatically affect how much they’re worth, says Kathy Longo , certified financial planner and certified divorce financial analyst in Edina, Minnesota , and author of “Flourish Financially: Values, Transitions, and Big Conversations. “
A Roth IRA is worth more than a traditional IRA with the same balance, for example, because Roth withdrawals won’t be taxed in retirement. Likewise, a stock or other investment that’s grown a lot in value could trigger a big tax bill that reduces its ultimate value.
Homes can be particularly problematic, especially in high-cost areas. A married couple can exclude up to $500,000 of home sale profit from their taxes, but a single person can avoid tax on only $250,000. Couples need to consider the future, after-tax value of assets during their negotiations, Longo says.
Another big change that can affect divorce negotiations is spousal support. Also known as alimony, spousal support used to be taxable to the person receiving it and tax-deductible for the person paying. That’s no longer true. Starting with divorce agreements made this year, recipients won’t owe taxes on spousal support, and those who pay it can’t deduct it — which could make support agreements trickier to negotiate.
LEAVING JOINT CREDIT ACCOUNTS OPEN
Even if one spouse agrees to take responsibility for a debt, the other spouse can still be held liable if his or her name is on the account. Creditors aren’t bound by divorce agreements, since your contract with them predates the split.
Ideally, divorcing couples would close joint accounts, remove authorized users from credit cards and transfer the debt to new accounts or loans in the responsible spouse’s name only.
ASSUMING A COURT FIGHT IS INEVITABLE
One survey by Nolo, a self-help legal publisher, found divorce costs among those surveyed averaged $15,500 in 2015. Divorces involving child custody and support issues averaged $19,200, and costs can shoot far higher if cases go to trial.
Mediation or collaborative divorce can save people money compared with traditional divorce proceedings, Newman says. Mediation, an alternative dispute resolution process, may not involve lawyers and relies on a neutral third party to help devise an agreement. With a collaborative divorce, each spouse is represented by an attorney trained in the collaborative process of negotiating deals that are fair to both parties.
Mediation requires spouses to be cooperative and open, especially about finances. Collaborative divorce can be an option when the relationship is more problematic but both parties want to avoid expensive litigation.
With a traditional divorce, people may dig in their heels and have to turn to a judge — sometimes repeatedly — to decide issues as they’re negotiating an agreement. Avoiding that adversarial process as much as possible can make a lot of financial sense, Newman says.
“I tell my clients, ‘You’re going to settle eventually anyway. The only question is how long it will take and how much you’ll pay me,’” she says.


Fashion’s bad boy Jean Paul Gaultier bids farewell to the catwalk

Updated 17 January 2020

Fashion’s bad boy Jean Paul Gaultier bids farewell to the catwalk

  • The affable Frenchman brought an often elusive sense of fun to the world of fashion
  • His reputation as a provocateur brought him both fame and contempt from other fashion designers

PARIS: French designer Jean Paul Gaultier, known for dressing stars like Madonna and who cultivated an irreverent image as the industry’s “bad boy,” said on Friday that a fashion show in Paris next week would be his last.
Gaultier, 67, did not detail what would happen to his namesake brand, owned by private Spanish fashion and fragrance group Puig, only saying in a brief statement that it would continue to exist.
“I will be celebrating my 50th anniversary in fashion with a major Haute Couture fashion show,” Gaultier said in short statement.
“Be reassured that Gaultier Paris will go on, with a new project which I am the instigator, and that will be revealed to you very soon,” he said.
His fashion firm could not be reached for further comment on whether Gaultier would be appointing a successor as creative chief, or what his plans were.
The affable Frenchman, who will be celebrating his 50-year-career in the industry with his swansong runway show next week, brought an often elusive sense of fun to the world of fashion.
Some of his tongue-in-cheek collections in recent years included one themed around cigarettes, which he presented as a dig at overly moralistic attitudes.
Gaultier, who has also designed costumes for films and co-presented cult television show Eurotrash, has long been known for pushing boundaries in fashion, blurring the lines between men’s and women’s clothing.
One of the few household names in high fashion, Gaultier emerged as one of the leading young talents in French fashion during the early 1980s, shaking up the establishment with wild designs drawn from street culture, punk and the club scene.
His reputation as a provocateur brought him both fame and contempt from other fashion designers. He is best known for the sailor-style, white and blue striped tops that Gaultier often wears himself.
In recent years he had dropped more regular collections, focusing on producing one-of-a-kind ranges presented during Haute Couture fashion weeks in Paris.
His brand still produces perfumes.
Gaultier made his first steps in the industry as an apprentice of French designer Pierre Cardin in the 1970s, going on to present his first individual collection in 1976.
He later also worked as a designer for Hermes, which used to own a large stake in his label before selling it to Puig in 2011.