August 2008 Archives

August 20, 2008

Divorce as an Environmental Issue?

A recent article in Australia's National Newspaper argues that divorce is "not just heartbreaking -- it's bad for the environment." Can this be true? And is there anything to be done about it?

Like the United States, Australia has a high divorce rate; approximately 40 per cent of marriages there end in divorce. Matthew Warren's article in the business section of The Australian points to the doubling of households and the resulting inefficient use of resources that occurs when couples divorce. The number of people living in a household, he says, is the biggest single determinant of how much energy and water are used and how much waste is generated. Even though it seems counterintuitive, more people in the household means that fewer resources will be used.

Of course, owners of rental properties, suppliers of small electronics, and furniture stores will benefit when a divorcing family needs to duplicate its household furnishings. But consuming more of these items isn't good for the environment, either. The mantra of "reduce-reuse-recycle" is difficult to apply when two households are being created where once there was one.

Unfortunately, there's no simple, immediate solution to this problem. People who can't stay together for the sake of their children surely won't be able to stick it out for the sake of the environment, either. But as Warren argues, we can start thinking about the bigger picture and considering options for creating more efficient, environmentally sustainable societies.

August 15, 2008

Divorce Financial Planners Turn 10

Do you even know what a Divorce Financial Planner is? If not, you're not alone -- Divorce Financial Planners (sometimes also called Divorce Financial Analysts) are a relatively new addition to the kinds of assistance available to people going through a divorce. In fact, the profession has only existed for 10 years, but it's growing as a result of more frequent use of DVPs by divorcing parties, divorce lawyers, and mediators.

A Divorce Financial Planner can help divorcing parties assess their situation and make smart decisions about dividing their assets and assigning their obligations. DVPs look at your entire financial picture, taking into account not just what looks like a fair division in the present, but also the future ramifications of potential settlement scenarios. They'll consider tax consequences, the present vs. future value of money, each party's retirement needs and career plans, and whatever else needs to be factored into your financial planning.

Not everyone needs a DVP -- if your assets aren't complex and you haven't been married long, you probably don't need the comprehensive advice. But if you've got a house, more than one retirement plan, and investments -- and especially if it feels overwhelming to you to consider all the possible options for settlement -- you might benefit from some professional help. If you're cooperating in your divorce by using mediation or collaborative practice, you can share the cost by having one DVP assess your situation. 

To find a DVP, ask your attorney if they're using one. Or, go to the website of the Association of Divorce Financial Planners or the Institute for Divorce Financial Analysts and find a DVP in your area.   

August 11, 2008

Insurance Proceeds Awarded to Ex-Wife

A California police officer left his new wife in the lurch when he failed to update the beneficiary on his life insurance policy after his divorce. When Officer Jerry Ortiz was killed in the line of duty in 2005, he had been married for only three weeks to his new wife, Graciela. Four months before that, his divorce from his first wife, Gloria, had become final.

Right after the divorce was finalized, Officer Ortiz's attorney sent him a letter reminding him to update the beneficiary designations on any insurance policies. We can only imagine what kept him from doing so -- maybe his pending remarriage, maybe his demanding job, maybe the very common reluctance to think about his own mortality. Whatever the reason, Ortiz never made the change -- and when he died in June of 2005, the designated beneficiary for his life insurance policies, with benefits totaling half a million dollars, was Gloria, his first wife.

The life insurance companies did what insurance companies do in these situations -- they deposited the money with the clerk of the court and filed a lawsuit asking the court to decide who should get the money. The federal court decided that the insurance proceeds were Ortiz's separate property after the divorce, and that he expressed his intention to name Graciela as his beneficiary (to his attorney), and awarded the money to be split between Graciela and Ortiz's two sons. But the Ninth Circuit, a federal appeals court, reversed the decision and held that the divorce judgment did not extinguish Gloria's rights and that because Ortiz did not take any action to change the beneficiaries, Gloria was entitled to the insurance money.

The moral of this story could not be more clear: After your divorce, make absolutely sure you have taken care of the details. That means updating your insurance policies, changing title to your property, making a new will, closing all joint accounts, and following up on anything else you need to do to comply with your settlement agreement or final judgment. Don't wait, or your hard-earned assets could wind up exactly where you don't want them to be.