July, 2013


Question:

I ran a report in October of 2012 and am running the same reports now, in July of 2013. The net income is higher now. Why would that be?

Response:

If the numbers are only marginally higher, and the incomes are the same, it is probably because the tax brackets and exemptions have increased with inflation.

This assumes that incomes are not so high that the person is affected by the new, higher, tax brackets.

For such people, one would expect that net income would be lower in 2013.

If you have a printout from 2012 of the after-tax cash flow spreadsheet, you can look at every column in the first year, compared with the current one.

If taxes are the only different thing, then that is probably the answer.


Question:

I am a client using the client software, and the "Send File to Professional" e-mail did not work. What can I do?

Response:

If you are using the client software on Windows, you can do the following:

1. Start an e-mail to your attorney.

2. Attach a Family Law Software file to the e-mail. To do that, click the button to attach a file, and navigate to Documents/Family Law Software, and select the file.

3. Send the e-mail.

If you are using the software on Macintosh, open Family Law Software and click Ctrl+A (or Cmd+A) to save the file in a different place. Save it on the desktop or in a documents folder. The follow steps 1 through 3 above.


Question:

Does the software calculate days in a custody arrangement? i.e. 3 weekends a month during the school year and 3 weeks out of 4 in the summer = 40% of overnights or not.

Response:

The software has a more limited calculator, which you will see if you click the Calendar button, shown below, in states where the number of overnights affects the child support calculation.

Calendar button


Question:

Relating to the Teacher Retirement System of Texas.

As I understand it, employees in the system have a mandatory contribution of 6.4% of their annual salary which is deposited into the system.

If the employee stays in the plan for 10 years but leaves before retirement leaves before retirement, he or she can withdraw the money and roll it over into a 401(k).

If the employee reaches retirement age and is still enrolled in the plan, the state takes all the money that the employee has deposited in the account and gives them a defined monthly benefit of some amount.

The question is how to represent this in Family Law Software.

Response:

If you do not expect the employee to leave before retirement, I would suggest representing it as follows:

1. Annual contribution. You would enter this on the Living Expenses > Mandatory Deductions > Mandatory Retirement. You can enter today's dollar amount, and on the "more info" screen, specify a rate of increase. As with all expenses, if you do not specify a rate of increase, the software will use the inflation rate.

2. Benefit at Retirement. I would specify this as a defined benefit pension plan, and try to get the information from the plan as to what the benefit is likely to be.

3. IRA benefit if leaves before retirement. I would not attempt to represent this aspect of the plan, unless you expect that the employee will leave before retirement.

If you do expect that the employee will leave before retirement, I would suggest representing it as follows:

1. Annual contribution. I would enter this as an IRA, and specify the annual contribution as a contribution to the IRA.

This will get deducted for federal income tax purposes, the same as a mandatory retirement contribution.

2. Value of IRA. I would enter the amount currently in the account as the value of the IRA.

3. Duration of contributions. Specify the number of years you expect the contributions will continue.


Question:

In this case, the husband's pre-tax income is about $200,000 and the wife's pre-tax income is about $35,000.

We are trying to decide whether the parties should attempt to complete the divorce by the end of that year, or not, based on tax considerations.

We are now in the month of July.

Does it matter for this computation whether spousal support payments, projected to be about $6,000 per month, start in July versus September?

Response:

In this case, it does matter.

If the payments begin in July, it is more advantageous from a tax perspective to complete the divorce by the end of the year, and have the wife file as head of household and the husband file as single.

If the payments begin in in October or later, it is more advantageous from a tax perspective to be married at the end of the year and file joint tax returns.

The way to determine this is to go to the What If Analysis screen and set up two identical scenarios. Then make the filing status single/head of household in one scenario and joint in the other scenario.

Then, go to the alimony/support screen, and specify that alimony begins in July.

Then go back to the What If Analysis screen, and recorded the combined bottom line in both scenarios.

Then go to the alimony/support screen, and specify that alimony begins in September.

Then compare the results at the bottom of the What If Analysis screen.

The reason for this result is that, with more months of spousal support, the arbitrage gains from the tax effect of alimony offset the benefits of the joint filing status.

With fewer months of spousal support, the benefits of the joint filing status outweigh the gain from the spousal support arbitrage.

The general lesson is that the month in which spousal support begins can be important in determining the best filing status in the current year, from a tax perspective.


Question:

How can I indicate that closing costs are to be deducted from the value of real estate for purposes of equitable distribution/property division?

Response:

With respect to real estate in particular, if the property is going to be sold, there is an option also to deduct closing costs from the value shown on the Property Division screen.

To see that, specify at the top of the screen that the property will be sold.

 

Then scroll down to the section on sale of real estate.

Some people like to see the value of the property management of anticipated sale proceeds, and some do not. So it is an option.

 


Question:

I need to find a file that has been lost.

Response:

Family Law Software is silently making a backup of every file you create on your computer. The backup is stored on your local computer, regardless of where your client files are stored.

If a file is lost, click the Restore button on the Files > Open/Save Files screen. If the file was created on the computer where you are sitting, you should be able to search for it and open it up.

You will see backups of a range of dates and times, so if you just want to retrieve an earlier version of the file, you can do that too.

We do NOT keep backups of your files on our servers.


Question:

My client e-mail a file to me, but I did not get it.

Response:

If the client is using Client Software, simply ask the client to send the file again.

If you still do not receive it, the client can attach it manually to an e-mail. Here is how to do that.

Windows:

1. Address an e-mail to the professional.

2. Click the paper clip to indicate an attachment, navigate to My Documents > Family Law Software, and attach the file with the client's name.

3. Send the e-mail.

Macintosh:

The client should first click Ctrl+A and save the file on the desktop or in some other folder that the client can access from his e-mail.

Then follow the Windows instructions above.


Question:

In Pennsylvania, I entered overnights, but the software is not making any adjustment Why not?

Response:

In this case, the obligee earns less than 10% of combined income, therefore per rule, there is no adjustment.


Question:

Is there a way to save a template of custom expense categories? That is, I have overridden several expense categories, and I would like to use these in future files.

Response:

Create a blank file with these categories. Save it without any other data entered to "Template." Also save it to "Template Backup." When you start a new client file, do so by opening "Template" and immediately selecting "Save As."


Question:

The mortgage on my rental property is not appearing as a personal expense on the Affidavit, and I think it should.

Response:

By default, if the property is rental property, the mortgage expense is netted against the rental income. The net amount will appear as rental income or loss. If the mortgage were to appear separately, that would be double counting.

You have the option, however, to have the mortgage be treated as a personal expense, not as an offset to rental income. To do that, in the rental income section, on the question relating to the percent of mortgage allocable to the rental activity, enter zero.

 


Question:

Where is "notes between spouses" on the Marital Property Division report flowing from?

Response:

On the "more info" screen for a mortgage, there is a box that says that the mortgagor (payee) is the other spouse, instead of a bank. If that box is X'd a "note between spouses" will appear on the Marital Property Division report.


Question::

The noncustodial parent's income is higher than the top threshold for the child support guideline chart. Can Family Law Software extrapolate what child support would be with the higher income level?

Response:

Family Law Software and extrapolate in the following states:

Colorado (on the Income > Wages screen)
Connecticut (on the Income > Wages screen)
New York (on Key Support Data)
Ohio (on "Income > Over $150,000."

The software does not extrapolate in New Jersey and Rhode Island.

In California, Florida, Illinois, and Pennsylvania, there is no "top of the chart."

 


Question:

How can I print a blank New York Net Worth Wtatement?

Response:

Lawyer tab > View/Print Net Worth > Click here to view blank Net Worth Statement.

 


Question:

I have changed the alimony that will be paid, but this is not changing taxes or the affidavit.

Response:

In this particular file, the alimony amount was overridden on the View/Edit Taxes screen. So changes you make in the regular data entry field will not have an impact.

 


Question:

Whenever I start the software, I get the message "Family Law Software has encountered a problem and needs to close."

Response:

There is probably a corrupted file somewhere. Just re-install and you should be fine.

Click here to go to the Download page

Question:

How can I specify alimony or spousal support or maintenance as a percentage of bonus?

Response:

On the Planner tab > Alimony screen or Lawyer tab > Alimony/Support > ("more info" screen, there is a place to specify alimony as a percentage of bonus.


Question:

How can I tell whether I have the latest version installed?

Response:

Home tab > Software Updates > Check.

 


Question:

I’m wondering if there would be a way to be able to add a line in the retirement plan section to equalize the retirement moneys separately from the overall equalizing payment.

Response:

Click the "Equalization Payment and other options" link at the top of the Property division screen.

Then select "Include Totals for Asset Classes."

This causes the totals at the top of the page to include a subsection for retirement assets.

You can manually make sure that those balance when you are moving property around.

 


Question:

California-specific.

I have a spouse who is renting an apartment. I listed the apartment under the Real Estate section in the planner tab. I entered husband's living expenses on this screen (real estate details).
My problem with that this property comes up on the California FL142 in the real estate section of the California Affidavit. It shoes zero value, but I don't want it there at all. Is there a way to suppress it from flowing to the FL142, since this is not a property owned by the spouse, he is renting it as his residence?

Response

On the "more info" screen for Real Estate, scroll to the very bottom.

You will see a checkbox there to not carry the item to the Form 142.


The expenses will carry to Form 150. Please be sure that the percent allocable to the party (to the right of the expense amount) is correct.

 

 


Question:

How can I print out two sets of expenses, that is expenses for each party, using your Paper Dated Sheets?

Response:

Click the link shown below and select "Both Parties."

 


Question:

How can I enter an early distribution from a retirement account, so that the 10% penalty does not apply?

Response:

If you click "more info" on the IRA is 401(k) screen and scroll to the bottom, you will see the section where you should enter early distributions from retirement plans.


Question:

How can I create a sample file?

Response:

Home tab > Sample File.

 


Question:

I have a client with the following assets:

1 – Substantial Deferred compensation which hasn’t been taxed yet

2 – Substantial vested, but unexercised stock upon which ordinary income tax will need to be paid when exercised.

3 – Unvested and unexercised stock upon which ordinary income tax will need to be paid when, and if, vested and exercised.

How do I input these items and how do I account for the ordinary taxes that will have to be paid when received?

Response:

There are two alternatives.

1. As income.

simply to treat all of the items as deferred compensation.

Click "more info" on the Deferred Compensation line on the Nonwage Income screen.

Override year at the bottom of the screen with the amount of income that is anticipated in that year from the exercise of options, and from the payment of the deferred compensation.

You do not know at this time what those amounts will be or when the dates of exercise will be, but this gives you a way to put a stake in the ground on these items.

If you have the amounts approximately correct, and if the clients income stays fairly constant otherwise, then the only issue with not getting the years correct is the time value of money.

One thing this does not do is reflect the anticipated tax liability currently as a current liability.

But perhaps that is okay, as it is consistent also with the fact that the tax liability on future income also is not reflected.

2. As an asset.

Treat the deferred comp and stock options as an asset instead.

You probably have the current balance is in her deferred comp account, and the difference between her grant price and the strike price of her stock options, and how many shares she is entitled to.

Estimate the marginal tax rate on those options, and on the deferred compensation. Then enter approximate after-tax values for everything.

 


Question:

My clients have lent money to the wife’s sister. So they have a loan on which they are the creditor or recipient or payee. How should this be entered into the software?

Response:

You could enter this as a Cash & Investment asset.

You will want to know how the loan is being amortized.

In order to see how the loan is amortized, you can temporarily enter it as a Debt, click "more info," scroll to the bottom of the screen, and see the amortization.

In order to capture the dynamics of a debt whose payments are being received, you would do the following:

1. Enter the repayment amount as income from the asset.

2. Click "more info" on the left, click the link to "View/Edit annual income from the asset," and enter, as overrides, the payments for the years the debt is being paid.

3. Click the link to "View/Edit annual value of this asset." Enter the asset as having a declining value each year, representing the amortization each year of the loan.

 


Question:

Applies to New York only.

A question about local taxes on this file. NY City taxes should apply for husband as he works and lives in NYC, but

local taxes is coming out blank on this one page summary listing all taxes. Where is NYC taxes listed? Am I missing something?


Response:

New York City taxes are treated differently than local wage taxes, because they are actually income taxes (levied on all income) not wage taxes (levied directly on gross wages).

Click Lawyer tab > Background & Child, or Planner tab . Background Info to specify that New York City taxes apply.

You will see them on New York Net Worth Statement Expenses, section (m)(2).

Also, you will see them on the State Taxes report in New York.

 


Question:

The tax calculations do not match the tax withholdings on the paycheck or pay stub of the client and, for example, shows federal taxes to be significantly lower than state income taxes.

Response:

As you probably know, Family Law Software calculates actual federal income taxes, the number that would be due when the tax return is filed.

There are a number of reasons that this would be different than the withholding from the paycheck. Withholdings may either overstate or understate the actual federal income tax.

It is also possible that federal tax would be higher than state tax, especially in the case of lower income individuals who are benefited by the earned income credit, child credit, child care credit, etc.

You can look at the tax report (View/Edit Taxes) line by line, so you can let us know if you see anything there that appears wrong.

If you want to check the table lookup for the tax number itself, just Google "federal income tax table" and add the current year.


Question:

Is there anywhere to input planned annual savings into specific Cash & Investment accounts? if not, how would that be reflected otherwise?

Response:


All positive net cash flow runs into the Accumulated Savings account.

That account is assumed to be invested in a diversified portfolio.

You can see the parameters for the portfolio on the Assumptions screen.


Question:

Can I see liquidations on the Budget Report?

Response:

The best report to see liquidations is the Summary Totals Spreadsheet.

The Budget Report is "pre-liquidation" if you will.

So it is the Spreadsheet for Net Income after Expenses and Taxes.

Those reports show the ongoing income or loss but do not show liquidations.

 


Question:

Applies to Colorado only.

In my simple case, H has income of $100,000 per year, there is one child, and W has no income. Child support is $652 per month. Now, if I increase wife's income to $20,000 per year, child support actually goes up, to $709 per month. How can that be? (I am using the 2014 maintenance rules.)

Response:

What is happening is this:

As the wife's income goes up, the maintenance goes down.

So, in this case, when wife's income goes up by $20,000 ($1667 per month), the maintenance goes down by $834 pr month.

But the change in maintenance actually has a double impact on the child support guideline calculation, because it is both added to the mother's income and subtracted from the father's income.

So when mother's income increases by $20,000, mother's and father's relative percents of combined income in the calculation do not change very much at all. (In this case, mother's percent of combined income goes from 40% to 41.66%.)

But combined incomes are going up (because of mother's income), and so the basic child support support award goes up.

Since father's percent is constant (more or less), the child support award is a constant percent of a growing number, so child support goes up.

This is a very interesting finding.

The spreadsheet below has the details.

W has W has
Base case $20K $30K
Mother's income 0 20000 30000
Combined income 8333 10000 10833
Basic support 1087 1215 1290
Mother's % 40 41.66 42.3
child support 652 709 744
maintenance 3333 2499 2083
combined payments 3985 3208 2827

Note that because maintenance goes down, combined payments do go down, at least for as long as maintenance is paid.


Question:.

My e-mail address has changed. How do I change it in the software so that the notices I get about clients entering their data on the web go to the new e-mail address?

Response:

Here is how to change your e-mail address in the software:

1. Click Home tab > Prof'l Info > Click here to enter professional information.

2. Change the e-mail address.

3. Click OK

 


Question:.

In Florida, how do I get the check boxes for separate property to show up for an asset?

Response:

Click the "more info" link for the asset, then specify that part or all of the asset is separate property.

Also, at the top of the Asses & Liabilities screen there is a link for "Assets and Liability" screen options. One of those options is to show separate property checkboxes at the top level. Then you would not have to click "more info" to designate an item as separate property.

 


Question:.

I would like to show the Real Estate, including the marital residence a few ways/scenarios. I need your guidance on how to do so. First I want to show the Wife keeping the property. Next is to show that they retain it 50/50 and sell it at future date. Next is to show that the wife sells it at a future date. I may also want to show a refinancing.

Response:

There are two ways to approach this situation.

1. Create different scenarios and then print the reports from each scenario.

For example, enter W as keeping the residence. Then go to your reports.

At the top of each report is a line you can click to add a note, as shown below.

You could add a note describing the scenario.

Print each report.

Then, change the entries, change the notes, and print again.

2. Create different data files.

Set up all the data in the case.

Create scenario #1.

Click Files tab > Save.

Then click Files tab > Save As and save under a different name.

Create scenario #2.

Etc.

Now, if you wish, you can create a file label which will automatically identify the file in the title of every report you print.

To enter the file label, go to Planner tab > Reports, and type it in at File Label, as shown below:

The label is short in order to make sure it fits at the end of every report title.

Now you have each scenario in its own case file, and reports from each will automatically identify the scenario.

If you do this, it is very important that you remember to make any changes that affect all scenarios in all your files.