Contracts: Offer

The offer is the first step in establishing a contract between two parties. This stage outlines the actual terms of the contract. The party making the offer generally must have present intent to enter into the contract. This means that if a reasonable person understands the offer to be a joke, the contract can’t be valid. However, if the offering party claims that the offer was only a joke, but a reasonable person does not understand it to be a joke, the offer can still be considered valid. This is known as the reasonable person standard and is a common theme throughout contract law.

Once an offer has been made, it does not remain valid forever. In many situations, the party making the offer has the right to revoke the offer after some amount of time has elapsed. Whether this is specified by time-limitation language in the offer or is simply permissible before the other party has accepted the offer relies heavily on the circumstances surrounding the contract.

An Introduction to Contracts

Whether or not we realize it, contracts are a daily reality in all of our lives. They are present in actions as common as purchasing food at the grocery store to major life events such as signing the lease on a new house. Contracts can come in many forms, written or oral, express or implied. Despite how frequently we all engage in contracts, determining what makes a contract legal can seem tricky. At the most basic level, a contract must exhibit five essential characteristics to be considered valid: offer, acceptance, consideration, capacity, and legality. Over the next five weeks, we will explore each of these characteristics and how they relate to the contracts in your life.

Why Mediation?

Ultimately, we find that mediation is an excellent fit for those who would like to retain control over the final decisions in their divorce and, with the help of a mediator, are able to work with their spouse to compromise and reach agreements that are acceptable to both. The neutral party is able to facilitate and guide you through the process and draft your final documents.

At the end of the day, the mediation process helps to preserve a workable relationship between the two parties. There can’t be enough good said about this, particularly for those couples who still have children at home and will need to continue communicating in the future. It is a process that addresses not only the legal and financial aspects of your case, but also the emotional ones; it is designed to keep everyone working with, rather than against, one another. The fact is divorce is hard – there’s no reason to make it harder.

Mediation

If you find yourself either considering or simply facing a dissolution of your marriage, the traditional image of divorce – two couples fighting in court while a judge makes the final call – is no longer the only option you have. Cromwell Law specializes in non-traditional divorce, which is designed to decrease the costs and keep more of the decisions under your control.

On one end of the spectrum of non-traditional divorce you have the do-it-yourself types, who are able to come to much of the decisions themselves, and may only need a lawyer to offer advice, explain the process, or either draft or simply check over your final documents. On the other end is collaborative divorce, where you have a team that helps you and your spouse resolve your divorce out of court.  The team includes you, your spouse, your attorney, your spouse’s attorney, a neutral mental health coach and a financial planner.  

In between those two options is a third one, which we’ll be highlighting in our next blog series: mediation. In the mediation process, a lawyer is hired not on behalf of one spouse or the other, but to act as a neutral facilitator in your meetings, as you work through all of your divorce decisions.

Divorce Options: Litigation

Traditional divorce depends heavily on litigation to force a divorcing couple into agreement over the terms of their divorce. Each spouse hires an attorney to fight on their behalf, to gain the best deal they can while protecting their assets and their time with their children. Spouses are not required to talk to each other during this process. If spouses cannot agree on a final settlement the case goes to court and a judge will decide on the terms of the divorce for them. The most expensive option, neither spouse ultimately has much control over the final results, though traditional divorce is still the best choice for those who need the protection of litigation (often because of major power imbalances in their relationship, the most extreme example of which is domestic violence) or for couples who simply cannot agree on anything.

Divorce Options: Collaborative Divorce

Collaborative Divorce uses the format of interest-based negotiation, rather than litigation, to problem solve a divorcing couple’s disputes. First, both parties begin by hiring private collaboratively trained attorneys and meeting with them separately to discuss their wants and needs. Then the couple will meet independently with a neutral mental health coach, who will discuss some of the emotional aspects of divorce. Then both spouses, their attorneys, the neutral mental health coach, and the financial planner all meet as a team to resolve the families’ disputes. To keep the negotiations a collaborative team effort between all parties, clients and attorneys sign a “no court” agreement in which they agree not to threaten each other with litigation. By keeping out of the court system, you and your spouse retain primary control over your divorce rather than turning over your decisions to a judge.

Divorce Options: Mediation

Mediation uses a neutral facilitator (the mediator, who is also often a lawyer) to guide the divorce negotiations from the beginning. Depending on the complexity of your case, the mediator may recommend – or you may request – that additional professionals join the process, such as financial advisers and parenting experts. You retain major control of your divorce, as you can move at your own pace. Mediation is a particularly good fit for couples focused on co-parenting, who need to retain an amicable relationship with their spouse even after the divorce is finalized.

Divorce Options: Kitchen Table Divorce

The most cost-effective of the divorce options, a successful Kitchen Table approach depends on a couple’s ability to agree on major aspects of the divorce, such as financial issues, parenting plans, and the division of debts and assets.

In this type of divorce, you and your spouse begin by sitting down informally together, often around the kitchen table, to create the general framework of your divorce before involving any third parties. Afterwards, you meet with a lawyer who reviews your agreement and discusses any details you may have missed. The lawyers will draft the necessary legal documents, at which point you and your spouse review the terms. Once the paperwork is filed with the court, your informal agreement made at the kitchen table becomes a legally binding one.

Divorce - What Are My Options?

Divorce can make you feel like you have no options. In Montana, once a spouse declares that they want a divorce there’s nothing the other party can do to stop it. What you can do – whether you’re responding or instigating the dissolution of your marriage – is choose the process that will most effectively serve both you and your family. You can obtain as much, or as little, help as you need. From negotiations around the kitchen table at home to the heavy hand of litigation and the lawyer-guided mediation methods in between, you have choices when it comes to your divorce.

Over the next four weeks we’ll be discussing, in short, the different options you have when considering how to reshape your family.

Post-Divorce Parental Communication - Structure in Communication

Some parents communicate post-divorce without problems. Others may find that more structure is needed when working out issues, such as weekly planned phone calls with an agreed agenda of issues limited to their child’s needs. In either case, the important thing is to set consistent rules and policies, from toilet training and bedtime routines to homework expectations and teen driving. The phrase “Mom and Dad decided…” becomes both a useful tool and a powerful illustration of how their parents, though divorced, can still work together. How you individually implement those rules in your separate households won’t matter. What matters is this: conflict over your differences is more likely to cause harm than the difference itself. As parents - amiable split or hostile divorce - you still have the power to guide and protect your children, both separately and together.

The information in this blog series was gathered from the Summer 2015 issue of Family Advocate, Vol. 38, No.1. particularly from the articles “Parental Communication: How to Talk with One Another” by Jeffrey Zimmerman and Lauren Behrman, and “Divorce and Parent-Child Boundaries” by Robert A. Simon.

Post-Divorce Parental Communication - A Business Partnership

First, it is important to compartmentalize your emotions. Rather than allowing your history to dictate the way you speak with your ex, focus on your need to make decisions together without excessive conflict. One approach is to view your new relationship as a business partnership in which your business is to successfully raise your children. When you can see each other as co-partners, you both immediately have a stake in functional communication. You may still not respect, like, or trust one another, but at the very least you are united by the same goal: healthy, happy children who know their parents love them more than they love fighting.

Naturally, one of the problems in business relationship made up of only two people is that there is no tie-breaking vote. This is doubly difficult when you may have very different parenting styles, such as when one parent is viewed as “permissive” and the other “rigid.” However, “different” does not mean “wrong.” In fact, different styles, different points of view and different ways of doing things can all lead to children that have a richer range of skills. Instead of getting stuck on whose idea is “best,” recognize that neither partner ultimately knows what will work out best.  You’ll need to pick one and know that you can always revisit the decision.

Post-Divorce Communication

By definition, divorce is the legal dissolution of your marriage and you are no longer someone’s husband or wife. However, though Mom and Dad may have dropped nearly all of the roles they used to share with their ex – spouse, partner, companion, lover – they still share at least one: parent.

Parental communication seems relatively straightforward. You need to exchange information about your children and make basic decisions regarding their care. Yet what seems straightforward on the surface becomes much more complex the deeper you go, particularly when trying to cooperate with someone you may no longer respect, trust, or even like. Fortunately, your goal is not to resolve your marital relationship; it’s to communicate in a way that your children know that they are more important than the conflict itself.

Divorce Over 50 - Healthcare

Finally, in our series on divorce for those over the age of fifty: healthcare.

While private health insurance is an option, many of those over the age of 65 will find themselves turning to Medicare and Medicaid. You may qualify for Medicare as the divorced spouse of a worker if you were married for at least ten years, are still unmarried (or remarried after age 60), and are NOT eligible for Social Security benefits on your own that are greater than half of the benefits payable on account of your ex.

Medicaid, on the other hand, is only available to those who are low-income. Depending on the financial outcome of your divorce agreements, you may qualify. As such, it is important to consider whether it may be more economically practical to take less spousal support if it is more important that you remain eligible for Medicaid.

Also, it is important that you make sure that your living will, your medical power of attorney, and durable power of attorney are in the hands of a trusted friend or family member. Often people depend on their spouse for end-of-life decisions, and you will need to re-execute new ones if this is the case.

[This and the rest of the series was based on information obtained from “The 50+ Divorce Handbook, produced by Family Advocate magazine. For more detail, visit them at www.abanet.org/family/advocate/client.html]

Divorce over 50 - QDRO

One of the most important documents your lawyer will draft for you is a Qualified Domestic Relations Order (or QDRO), spelling out how retirement will be divided. The language is specific, fussy, and fundamental to approval by the pension plan administrator. Many retirement plans (for example those from the state and federal government and the military) have special rules, so it is paramount that whoever prepares your QDRO has experience with the language. It is a judicial order, and will become a part of your final divorce judgment.

Divorce Over 50 - Taxes & Social Security

The tax-man – even in divorce – always has his say. This is not, however, necessarily a bad say. First, your tax returns will help you to organize and determine your financial standing, as well as your understanding of your past income and expenses. Second, you will be able to calculate tax credits (such as those available to those over age 65) and take them into account when budgeting for the future.

This, of course, leads us into another important aspect of the later-years divorce: Social Security benefits. Those age 62 and older are entitled to collect their own Social Security benefits, or half of those earned by your ex-spouse if:

  1. Your marriage lasted at least 10 years and you are unmarried. If you remarry, you cannot collect unless your later marriage ends. It doesn’t matter if your ex-spouse has remarried.

  2. The benefits you’re entitled to receive based on your own work are less than those you’d receive based on your ex-spouse’s work. If the benefits from your ex are higher, you receive your own benefits first and then an additional amount from your ex’s Social Security.

For more information on collecting Social Security from a Former Spouse, go to https://www.ssa.gov/planners/retire/divspouse.html.

Divorce Over 50 - Financial Concerns

While children and custody are generally no longer an issue in a later-life divorce, the financial consequences resonate more deeply. Retirement savings designed for one household must suddenly be enough for two.

To begin, gather all of your financial documents, from bank statements to pay stubs, to pensions, insurance documents, and a record of all titles, assets, and liabilities. At this point in your marriage, most of these items will be comingled, and thus count as marital assets. Non-marital assets are only those that a husband or wife brought into the marriage and were kept separate from the marital estate.  An inheritance, for example, can be either marital or non-marital depending on when it came into the family and whether it provided a stream of income to the couple. A lawyer can help determine these factors.

Second, it is important that you begin tracking your spending, so that you have a realistic idea of your expected budget when you are no longer married. Your financial decisions during and after the divorce will depend heavily on your understanding of what the future holds.

Divorce Over 50

Divorce is hard no matter when it happens, but it can come as a particularly challenging shock when you are at or near retirement. Many of your plans are set by then; you likely believed that you knew how your golden years would play out.

However, your life is not over – simply changed. There are always ways to work both around and with those new changes. As always, it is a matter of planning, preparation, and keeping a grasp on the issues that are most likely to affect your new future.

Family Law & Taxes - Gains and Losses in Divorce

When a divorcing couple separates their assets, the division of property may well affect their taxes. For example, if you transfer property, one person will be able to claim a “gain” and the other a “loss” on their tax return. A “gain” results in higher taxes, a “loss” in lower ones. However, in a divorce, this transfer does not have to be reported as a gain or a loss. Just make sure you’re on the same page.

However, if you deal with the division of your assets by selling an item you owned together (such as a house or a car), each of you will need to claim your share of the gain or loss.

Taxes are just another layer to the dissolution of a marriage. Even those changes should become normal in the course of a few tax years.

Family Law & Taxes - Claiming a Qualified Child

For people who share custody of a child (either divorced parents or parents who were never married), these special rules apply:

  1. Tax obligations trump court orders. Even if the court ordered you to file in a certain way, IRS rules must be obeyed.

  2. Both parents cannot claim the same child for tax purposes. One child, one dependent exemption.

  3. The tax benefits from one qualifying child cannot be split among both parents.

  4. The noncustodial parent (meaning they had the child for fewer than half of the nights during the tax year) can claim the qualifying child for the Child Tax Credit and the Dependent Exemption if:

    1. The couple is divorced, legally separated, or lived apart for the last six months of the year

    2. The parents provided for the child’s support

    3. The child lived with one or both parents for most of the year

    4. The custodial parent signs IRS form 8332, which states that they won’t claim the child as a dependent

Please note that Item 4 is the only exception to Item 3 – the noncustodial parent can claim the Child Tax Credit and/or the Dependent Exemption even though the custodial parent can claim the child for the Head of Household filing status and Earned Tax Credit.

Family Law & Taxes - EITC

Another tax credit that may benefit you is the “Earned Income Tax Credit,” which is for working people and their families. The amount that the government gives to you depends on your income and the number of children you have. To qualify, you must have earned income (not counting public assistance), though you cannot earn over a certain amount. Furthermore, you cannot file as “married filing separately.”

There are also many kind of tax exemptions that you may be able to claim – the more you can claim, the less you pay in taxes. For example, the “dependent exemption” allows you to claim an exemption for each dependent in your household (as defined in last week’s post regarding a “qualifying child”).

For more information on tax exemptions, you can visit the IRS website at https://www.irs.gov/publications/p501/ar02.html#en_US_2015_publink1000220844.