The Coronavirus pandemic has sparked mass unemployment across the US, affecting numerous divorced families with court ordered support obligations. Many unknowns remain during this time such as how long local shelter-in-place orders will remain in effect, if and how many furloughed employees will be rehired and when, and how courts around the country will view the challenges among divorced families that have surfaced.
The following are 7 tips to consider to help evaluate a loss in income as it pertains to court ordered support obligations while getting through this national and global emergency together:
1. Stay Calm & Communicate
Even during normal non-emergency periods, the best policy is to communicate your change of circumstances with your ex-spouse. Notification opens the topic for consideration for both parties to address it to the best of their abilities moving forward. Refrain from making any swift, one-sided, uninformed decisions that could create additional stress.
2. Remain Flexible
Once the lines of communication are open, remain flexible to problem solve together. Every family, married or divorced, is experiencing financial challenges and must be flexible with one another. With court systems shut down and the reality of significant future delays, flexibility and finding a middle ground maybe well worth it for everyone.
3. Consider Decrease in Expenses
Many individuals and families are experiencing a decrease of expenses which could help offset a temporary loss of income. Dining out, recreational activities, travel, general shopping, work expenses, gasoline and transportation expenditures have all been significantly minimized for many families.
4. Show Best Effort
For some couples, finding middle ground is an impossible task. Therefore, it is important to be able to show good faith regardless of which side you are on. If cash reserves are available to continue paying current obligations, it is extremely important to do so to the best of your ability. If your expenses have possibly decreased as mentioned above, it maybe worth considering your ability to decrease support for a temporary period of time to remain flexible. This is extremely important to stay out of court (who doesn’t want to?). Iff court is inevitable, showing you gave your best effort to resolve the issue in front of a judge will be well worth it.
5. 2019 Tax Return
If you have not already filed your 2019 taxes, it may be worth filing sooner then later if you expect to receive a refund. Even if you think you may owe money on your taxes it still is important to file to even though the filing deadline has been extended to July 15, 2020. Payments do not need to be made until July 15th but filing sooner will speed up the process of receiving a stimulus payment.
6. Stimulus Support
This week Congress has been working diligently to pass the largest stimulus package in history. So far we expect each individual to receive a check for $1,200 if their income is below $75,000 (phases out after $99,000) and $500 per child age 16 and younger. Many details are not yet available, especially pertaining to divorced families. For example, it is uncertain whether the $500/child amount will go to a Head of Household status filing or an individual filing who was able to claim the child tax credit for the year – many couples alternate child exemptions/credits annually. Currently, it appears the government will be relying on taxpayers 2018 returns to calculate amounts to be sent to taxpayers.
Unemployment benefits have also been considerably bolstered. Qualifying for benefits will be significantly easier and less restrictive during the next few months. In addition to the regular state benefits, checks can be expected to have an additional $600/week for up to the next 4 months to help those who are out of work.
If you are a small business owner, the stimulus bill includes $300 billion in funds available to help bridge the loss in income that many business are experiencing. More details in how to access these funds are getting ironed out as well.
7. Discuss with Attorney
If a mutual agreement can be made to support each other and your family, be sure to discuss it first with your attorney. They will be able to shed light on what could be expected with courts moving forward and if a proposed agreement maybe worth considering.
This is an unprecedented time among our family, community, nation and world. We always have been - in this together, and we will reach the other side together. Please contact me directly if I can be of any support during this time including connecting you to any professionals or resources.
Disclosure: Divorce transition/financial planning services offered by A.M. Financial. Investment advisory services offered through WealthSource Partners, LLC ("WSP"). A.M. Financial and WSP are independent and unaffiliated entities. The statements and opinions expressed are those of A.M. Financial and Amy Mahlen and do not represent the views and/or opinions of WSP or any other associated or affiliated person of WSP. Furthermore, the statements and opinions expressed are for informational and educational purposes only and should not be construed as legal, tax, accounting or investment advice. All statements and opinions are current only as of the time made and are subject to change without notice.