Cash flow is an important topic that needs to be addressed when couples are going through a divorce. Figuring out how two people who once lived together in one household will now maintain two households while providing an adequate standard of living for their children (and preferably the same standard as much as possible) is challenging.
A strictly legal approach is top-down. The strategy examines the parties’ incomes, applies a statutory calculation based on percentages of those incomes, spits out a monthly payment, and expects compliance. Of course, arguments could be made concerning income imputation, the statutory cap, or extraordinary circumstances of the parties or the children. However, overall, the adopted philosophy is that once income is determined, support is calculated with limited consideration of other factors. Even in New Jersey, where a statutory formula has not been formally legislated to calculate alimony, the matrimonial community has instituted a common “rule of thumb” that still relies upon an income-based approach.
Overall, when it comes to support, the traditional legal outcomes place every family into a box and expect them to function financially within that imposed framework. Determining the exchange of money between parties by only looking at their incomes provides no consideration for how the family will function post-separation, does not account for all necessary expenses to that income, and can ignore the party’s specific circumstances and children’s needs.
At Berner Law & Mediation Group, we view the support analysis as a cash flow problem that needs to be solved for the entire family. We inform our clients about the outcomes of statutory formulas and the rules of thumb and thus still take income and the law into consideration, but other factors come into the analysis. We engage in monthly budget exercises (incorporating both the marital standard of living, each party’s past and future circumstances, as well as the children’s needs). We take into account options relating to tax return filing statuses that could positively provide more money for the family. We look at different income components (including salaries, bonuses, RSUs, etc.) and work to apportion the cash flow accordingly in a way that makes sense. We also discuss triggers to a change in the cash flow, which leads to future fluidity and flexibility to make alterations in the future.
Our firm helps our clients look at a bottoms-up approach to support. Treating the support concept as a cash-flow analysis allows circumstances, needs, and budgets to be a part of the conversation. Financial stability is crucial; thus, it is essential to address the cash flow issue with intentional detail. This approach will help formulate cash flow solutions that can work for all members of your family as much as possible.
Take the first step towards a comprehensive support analysis by contacting Berner Law & Mediation Group today. Let us help you navigate the complexities of divorce with a needs-based approach that puts your family’s financial future first. Call our offices for more information; we’re here to help you address the cash flow issue with intention and expertise.