Divorce and Taxes – Filing Status

Now that 2010 has ended, you may be wondering what impact divorce has on your tax status.  The general rule is that the IRS determines your tax status for a particular year based on your marital status on the last day of that year.

So, if your divorce judgment was approved by the court on or before December 31, 2010, then the IRS considers you unmarried for tax purposes for the entire year.  Even if you were married for 11 months and divorced for 1 month, you will still file tax returns as Unmarried (or as Head of Household if you qualify).

If your divorce judgment was not approved by the court on or before December 31, 2010, then the IRS considers you married for tax purposes for the entire year.  So, even if you filed for divorce during 2010 and have been living separately, you will still file tax returns as Married Filing Jointly or Married Filing Separately (or Head of Household if you qualify).

For more information about how divorce impacts taxes, here is a link to IRS Publication 504, titled “Divorced or Separated Individuals”.

Disclaimer: This blog post does not constitute legal or tax advice, and does not create an attorney-client relationship with the reader.  Check with your accountant about your particular situation since there are always exceptions to the general rule and tax laws may change.

A Different Way To Think About Conflict

What are the words that you associate with conflict? In my experience, most people think of words with a negative connotation – words like upheaval, fear, anger, anxiety, danger and alienation.

Yet John F. Kennedy, Al Gore and other leaders have noted that, when written in Chinese, the word “crisis” is composed of two characters – one representing danger and one representing opportunity.

When we experience conflict as a crisis, we tend to focus only on the danger, not realizing that it can be an opportunity as well.  What sort of opportunity?  Well, if people in conflict can tolerate the tension of being in conflict for long enough to explore constructive options for resolution, it can lead to a better state of being than existed prior to the conflict.

The challenge is how to work with conflict in a positive way when it raises so many negative feelings.  When I am in conflict with someone, I feel tense, alienated and anxious.  I hate being in conflict, and I seek to resolve it immediately.  My instinct is to avoid the conflict (run and hide, metaphorically), or accommodate (give in to make peace), or look for a quick compromise (splitting the baby, as the King Solomon story goes).  Other people’s instinct might be to fight and be aggressive – to destroy the person they are in conflict with before they are destroyed.

Because of my training and my experience as a family mediator and collaborative attorney, I know that there is a different, more constructive response to conflict – and that is collaboration.  When people in conflict collaborate, they seek to identify and understand the needs and interests of both parties and to find a solution that works for both – no one gives in, no one gets destroyed, no one runs away.  So when I find myself in conflict, I take a deep breath and remind myself that conflict is crisis AND opportunity.

Divorce and the Holidays

The following is a guest post courtesy of Andra Brosh, Ph.D. and Allison Pescosolido, M.A., the founders of Divorce Detox.  More information about Andra and Allison can be found at the end of the post.

One of the greatest fears that surfaces with divorce is the fear of being alone. Whether it’s the fear of growing old alone, sleeping alone, eating alone or just plain being alone, the depth of fear it evokes can be debilitating. There is no other time that this is more pronounced than around the holidays. Future negative fantasies about how the holiday season will be spent can spiral any newly separated or divorced person into a panic attack. Here are some common questions that our newly separated clients are asking about the holiday:

Will I feel embarrassed showing up at Thanksgiving without my Ex?
Will Christmas morning be lonely?
Will I have a date for New Years?
Will Santa come to both parents house?

The answer to all these questions is yes and no because you get to decided the answer. How you experience the holidays alone is completely within your control. At the end of the day you have many different options of how to think about your holiday season alone.

You have:
Fantasies of what “should be”.
Realities of what it was.
Possibilities of what “could be”.

Make three lists to help you determine what your choices are. Once you have your lists review your answers and decide which of them leaves you feeling optimistic and hopeful. Let your imagination run wild, anything not doable can be modified to work with your current situation and lifestyle.

Being on your own for the holidays is an opportunity to dig deep within yourself to find your own true desires and sources of joy. Use your alone time this holiday to get to know yourself. This will allow you to create a holiday experience that is perfectly designed just for you.

Andra Brosh, Ph.D. and Allison Pescosolido, M.A. are the leading divorce recovery experts in Los Angeles. Founders of Divorce Detox, a proven program guaranteed to speed recovery through the divorce transition, Andra and Allison are certified grief recovery experts, and both hold advanced degrees in the field of psychology. Friends for over 20 years, these dynamic women treat the trauma of divorce and see divorce as an opportunity for personal growth and a better life; they are changing the face of divorce in our society. Visit www.divorcedetox.com to learn more about their programs and cutting-edge work.

Co-Parenting

I recommend the article Successful Co-Parenting in the LA Times online for parents who are looking for some inspiration to work collaboratively with their spouse. The disappointments and resentments that arise when a marriage ends can get in the way of doing what is best for the children. But parents can choose to work together rather than against each other.   And a mediator or collaborative attorney can help them work together.

Mediation Styles

Many people have heard of mediation and understand that a neutral mediator helps parties resolve disputes without going to court.  What people may not realize is that mediation is not a one-size-fits-all approach.  There are different mediation approaches and styles, so if you are considering mediation, it is a good idea to ask a potential mediator to describe their approach or style.  Mediation approaches lie on a spectrum from Evaluative to Facilitative to Transformative.

• Evaluative.  An evaluative mediator is one who provides the parties with his or her evaluation of what a court would provide in their situation and seeks to encourage the parties to accept that result.  An evaluative mediator would likely meet with each side separately to convey the weaknesses of their case and to encourage compromise.  This approach might be used in a case that has been in litigation and may be close to trial — for example, the McCourt divorce case.  There has been significant legal analysis and discovery already completed, and the parties want a quick resolution or else they will proceed to trial.  There is not the time or the inclination to see if the parties can communicate constructively with each other.  Often, former judges are engaged as evaluative mediators.  Parties may be more likely to follow their mediator’s recommendations based on their judicial experience.
• Facilitative.  A facilitative mediator is one who focuses on helping the parties to (1) exchange information, (2) understand their needs and interests, (3) understand the law, and (4) brainstorm and evaluate options for resolution.  A facilitative mediator may or may not meet separately with the parties.  Whether meeting separately or together, a facilitative mediator does not try to push the parties into a settlement.  This approach works best when people come to mediation before they have started any legal action, or if there has been only minimal legal action such as a consultation with an attorney.  In these cases, the mediator will seek to help the parties to communicate constructively and to take control of the outcome of the dispute.
• Transformative.  A transformative mediator is focused primarily on intervening to assist the parties in changing their communication dynamic.  The transformative mediator generally meets with parties together rather than separately.  The transformative mediator does not provide information about the law, but the parties could learn about the law from individual attorneys if they so desired.  This approach might be used if the parties seek primarily to improve their communication dynamic, as opposed to resolve an isolated dispute.

In practice, many mediators have a primary approach or style, but may adopt elements of other approaches depending on the situation.  My approach is primarily Facilitative.  I seek to help the parties work out their own solution, focusing on making sure they have the information the need to make informed decisions, and helping them communicate constructively.  I generally meet with parties together because I find there is real value in having the parties hear each other directly, rather than through me as a messenger.  In certain circumstances I would meet separately with the parties — for example, if after reasonable efforts working together, we are still at impasse.  But I do not seek to force people to accept a resolution as I believe strongly that self-determination leads to the best results.

The McCourts

I have been reading this week about the ongoing divorce trial of Frank and Jamie McCourt.  At issue is the interpretation and enforceability of a postnuptial agreement they entered into in 2004.  The agreement contains an exhibit that identifies which assets each party would maintain as separate property.  One signed version of the exhibit provides that the Dodgers are Frank’s separate property and another version indicates that the Dodgers are community property to be shared equally.  The difference is worth hundreds of millions of dollars.

What I find so interesting about this dispute is that there is clearly enough money for both parties to live exceedingly comfortable lives.  They could easily have found a solution without having resorted to litigation.  And yet, they have chosen to battle it out in a court — with the attendant financial expense and loss of privacy that requires.  Plus, I’m sure the amount of time and energy they have each invested in this process is enormous.

So I’ve been thinking about what might be holding them back from reaching a resolution. Of course, I have never met them and so this is all speculation, based on my experiences as a mediator facing people trapped in conflict.

One factor could be that one or both of them may approach conflict resolution as a winner-take-all proposition.  You have to fight to destroy your opponent or risk being destroyed yourself.  It seems from their previous business dealings that they lean towards this adversarial approach.  Whatever the merits of that approach in business dealings, there are downsides to using this approach in family matters, particularly when there are children involved.

Also, people in the midst of a divorce or other conflict are generally not at their best. They may come across as angry, defensive, entitled, helpless and/or stubborn.   Rather than judging them for their behavior, I try to understand what the world looks like from their view.  Often, people in conflict feel confused, sad, anxious and/or overwhelmed.  If they can find a way to have more control over their situation and find solutions that alleviate some of their fear, then they can step up to being their better selves.

It is hard, given the media coverage about the McCourts, to view them with empathy.  But if I try to imagine what is going on beneath the public image, a few possibilities come to mind.  For one, I imagine that there is a desire to save face that prevents either from giving in to the other this deep into the dispute.  Also, for many people, ending a marriage is sad, and it can be a welcome distraction to feel angry and focus on a dispute. So perhaps the McCourts find that focusing on the dispute over the Dodgers is easier than focusing on the disappointment over the ending of their long marriage.  And, finally, they may have concern for their financial future, as odd as that may sound.  Although the have substantial assets, they also have substantial debts, they have experienced financial trouble in the past, and the real estate they own has decreased in value.

It will be interesting to see how the McCourts resolve their dispute, and whether either of them ends up feeling like the winner.

Children of Divorce

Divorcing parents often wonder what impact a divorce will have on their children in the short term and as they become adults themselves.  I recently attended a conference and had the benefit of hearing from a panel of people whose own parents had divorced between 20 and 40 years ago when they were children.  These adults were willing to share their personal stories in the hope that there could be lessons learned about how children are impacted by divorce.  Their stories were moving and powerful.  What made a divorce good or bad to these panelists seemed largely dependent on a few common themes.  Divorce were “good” when the child felt his or her parents worked cooperatively with one another during and after the divorce, provided emotional support to the child, and kept the child shielded from any conflicts between the parents.  Those who described their parents’ divorce as “good” felt capable of moving forward without carrying negative emotional baggage.  Divorces were “bad” when parents allowed the child to be placed in the middle of conflicts between the parents, or put a burden on the child to process and handle the divorce as a mini-adult rather than as a child at their particular developmental stage.  The consequences of a “bad” divorce were that the child struggled with issues of trust, security and commitment, sometimes continuing into adulthood.  Interestingly, the following factors did not seem determinative of whether a divorce was good or bad from the child’s perspective — the age of the child at the times of the divorce, whether there had been infidelity in the marriage, or the particular parenting schedule in place after the divorce.   Most importantly, the panelists all expressed that parents need to make the choice to put their children’s needs first as they navigate a divorce.

Consensual Dispute Resolution (CDR)

Last month, I attended a terrific conference entitled “Helping Families: New Directions in Consensual Dispute Resolution”.  Those who have heard the term “Alternative Dispute Resolution” (ADR) may be wondering how Consensual Dispute Resolution (CDR) differs.   The term ADR has been used for the past 20 years or so to identify ways to resolve disputes outside of litigation and the courtroom (aka mediation and arbitration). These processes called Alternative because they were “Alternative” to litigation.  However, with the rise in use and acceptance of family mediation and Collaborative Law, the term “Alternative” no longer seems to fit.  Family Mediation and Collaborative Law are now a part of the mainstream.  What does distinguish them from litigation (and from arbitration) is that they are “Consensual” – that is, there is no judge or arbitrator who imposes a solution on the parties. Family Mediation and Collaborative Law are voluntary processes in which the parties devise their own resolution – one that satisfies both parties needs.  Now, within the Family Mediation and Collaborative Law professional communities, there is a new trend to identify our work more accurately as “Consensual” rather than “Alternative” which I believe is a step in the right direction.

A Round Table

In my office in New York, I conducted mediation sessions in a conference room that I shared with other attorneys in my suite.  The conference room table, chosen long before I arrived, was rectangular, and long enough to seat 10 people if need be.  Generally, I would sit in the middle of one long end of the table and the parties would sit on the other side of the table, next to each other.  This configuration worked fine, but was never my ideal notion of how the mediation session would be set up.

Setting up a new office in Los Angeles allowed me the opportunity to choose the furniture, and I chose to have a round table.  To me, the round table is a symbol of some of the values and philosophy I bring to family mediation.  A round table means that I do not sit “across” from the parties –which might suggest that I am a judge or arbitrator who will impose a resolution on them after hearing both sides.  And a round table allows the parties to sit near each other without having to be on the same side or on opposite sides of the table –  thus acknowledging their separate interests and their different views of the dispute, while not placing them in an adversarial posture.

The term “roundtable” is often used to describe an assembly for discussion of a particular topic, with an implication that everyone who sits at the table has equal status.  In the type of family mediation and collaborative law that I practice, I believe that the parties are best served by being active participants, with the power and control to determine the best outcome.  I try to help them to see their dispute as a common problem they are trying to solve together.  My role is to facilitate their discussions and help them develop a deeper understanding of their conflict and their options. I am an active participant, but not a coercive one.   The round table serves as such a powerful symbol of what I work to achieve in mediation with my clients.

Hello Los Angeles

I have now officially opened my family mediation and collaborative law practice in Beverly Hills.  It’s been quite a journey from New York to Los Angeles, including taking the California bar exam.  I remember completing the New York & New Jersey bar exams back in 1994 and the relief I felt at knowing that I would never have to take a test again.  So quite a surprise to find that life led me to a convention center, with thousands of others, taking another big test.  Thankfully, I passed the exam, so now that should really be the last test I ever have to take.  Although studying for the test was quite time-consuming, it provided a valuable lesson in California family law and trusts and estates law, which will be useful in my practice.  (And if I suddenly need to argue a First Amendment case in front of the Supreme Court, I’m up to speed on that area of law too. )

A more fun part of the transition was choosing an office and picking out furniture.  Having practiced in New York for almost 5 years, I had a good sense of what kind of environment I wanted to create for my office. People in conflict often feel unsettled, angry, sad and afraid.  I wanted my office to evoke a feeling of calm and hopefulness.  I found a great space – a serene, sunny office in the heart of Beverly Hills.  I picked furniture that is comfortable and welcoming yet still professional.  And the walls are filled with artwork created by my mom over the years.  Not only is her work beautiful and perfect for the space, it is also a pleasure for me to be surrounded by it.