Marriage lockdown: Divorce in the time of coronavirus
Fear, stress and anxiety are common emotions today. But what happens when those tensions combine with marital discord, and what can you do to help? Divorce may be contemplated or already underway. This is where you come in.
At the onset, encourage your clients to speak to professionals. For instance, a therapist can help them deal with current and future stressors.
Ensure they open up to financial confidantes, such as their accountant, tax advisor and wealth manager. Your clients will no doubt have questions about how their finances will look now versus post-divorce.
Divorce and COVID-19 each bring various tax considerations. If your client is working from home, be prepared for questions about home-office deductions and related expenses. Explain to your clients the concept of different loss carryforwards and how they might help in future years, and what they can do to ensure the carryforwards can be utilized. In a divorce content, not all carryforwards can be directly shared with the spouse. This is a particularly important concept if you are advising a client in the midst of a divorce. Also discuss the concept of government loans, when and how forgiveness may apply, and any tax consequences of that forgiveness.
What financial obligations will your client have, both during and after the divorce? What financial support will they receive or pay? Can they afford to keep their home? Each asset they retain or part with has its own possible tax consequence. Help them with these analyses to ensure they are actually receiving or paying what they intend, after factoring in those tax effects.
Of high importance is ensuring your clients know how government programs like the Paycheck Protection Program work, and which programs are forgivable vs. those which are not. Perhaps most important, if the government assistance they receive is forgivable, make sure you carefully guide them down the path to ensure they do not improperly utilize the funds or misreport them, and advise them on what they should be doing to ensure forgiveness occurs. It would be financially devastating for a client to receive monies from the government which they believed would be forgiven, only for them to have to repay them later as the result of an avoidable mistake.
And, of course, ensure they consult with a qualified family law attorney, appropriate for their personal situation. This is often the first step. Consider the attorney’s experience and credentials. Are they Board Certified in Family Law? Are they members of any professional organizations? What experience do they have? And, perhaps most importantly, are they accessible, responsive, and are they the right fit for your client? Emotions are high, and accessibility is key.
Counsel your client to have a private location to communicate, and one in which their spouse cannot eavesdrop. If their home is not appropriate, then they can call from a store parking lot. They must ensure their emails are not monitored by anyone else. They should change passwords and confirm that their emails or documents do not show up on other devices, such as a family computer or even a child’s iPad. Remember that cloud-based sharing services like iCloud and Google Drive can be linked across multiple devices. Change passwords and turn off these features on other devices. This includes photo sharing applications and messaging services!
Give homework. Your client should take advantage of their time at home and inventory belongings and make copies of important financial records. Phone applications can work as a portable scanner. Have them log into accounts and download statements before any access is removed. Likewise, they should inventory items of significant value, such as jewelry, artwork and collectibles. Include photos with date-stamps (this is usually built into cell phones). Everything should then be stored in a secure location — whether printed or digitally.
They should know that taking these steps to prepare does not necessarily mean that divorce is a given; instead, they will be prepared for what may (or may not) lie ahead. If nothing else, they (and you) will at least have a solid grasp of their personal situation. Most individuals truly do not know how much they spend in a month or what they really need to be saving.
There are also alternatives to divorce. For instance, a postnuptial agreement can be entered. This is like the better-known prenuptial agreement, but is done during the course of a marriage (rather than before it). It can govern your client’s ongoing relationship as well as what happens if they do wind up getting divorced. The same homework noted above will be necessary to prepare a “postnup.”
Likewise, there are alternatives to litigation and trial. Online mediation is now a reality. While in-person mediation is the norm, online mediation can now occur through video services with each party and their team in different “virtual rooms” with screen-sharing abilities, and even settlement agreements can be signed digitally. Your client can use mediation to settle their entire case or even just temporary issues like financial disclosures, temporary support, timesharing with children, living arrangements, etc. Judges often require family law mediation prior to litigation anyway.
While much of the world is frozen right now, it is important to take care of our own psyche, and many individuals in this day and age find they are a better person, partner, parent and the like when they are not with their current spouse. That is an unfortunate reality, but oftentimes a fortunate long-term personal improvement. It is important to still bring some level of brightness and peace to life, even in the darkest of times.