Splitting The Pie - divorce: Split-Up Web site and software

Kiplinger's Personal Finance Magazine, July, 2000 by Kevin McCormally

DIVORCE | How to hold your FINANCIAL FUTURE together when your marriage is breaking apart.

AS IF THE emotional issues of untying the knot weren't nettlesome enough, divorce can also be one of the largest and most convoluted financial transactions of a lifetime. Money decisions made--in the heat of anger or the calm of careful calculations--are likely to leave an indelible imprint on the balance sheets of divorcing husbands and wives.

"People wind up being harmed a lot more emotionally and financially by divorce than they need to be," says Harvard Law School grad and software developer Daniel Caine. He's developed a program that he hopes will limit the damage.

Split-Up software and its complementary Web site (www.splitup.com) offer a wealth of practical information on the legal and emotional issues of divorce, as well as the financial ones. The Web site is free. It includes generic information about the legal aspects of divorce, and specific details about the laws in the ten states where Caine says more than half of all divorces occur: California, Florida, Illinois, Indiana, Massachusetts, Michigan, New York, Ohio, Pennsylvania and Texas. The Web site also includes general information on how child-support obligations are figured.

The software, which buyers download from the site, costs from $5 for a single use of one of several calculators (such as one to figure the division of marital assets) to $199 for a package that includes reusable calculators, a full-fledged financial planner and a program designed to figure the current value of a husband's or wife's interest in a company pension plan.

"A lot of people have never done any financial planning," Caine says. "But when they divorce, it is forced upon them."

He thinks the biggest financial mistake people make in the midst of a divorce may be failing to understand the value of the assets involved. "It's amazing how often the wife gets the house and the husband gets the pension," Caine says. "But that might be wildly wrong for purposes of what's fair." Split-Up's pension-evaluator software--which is available outside the package ($99) or for one-time use on the Web ($49)--makes quick work of valuing a pension.

The software is particularly strong on tax issues--not a surprise since Caine and his partner in this venture, Wendell Smith, teamed together in the '80s to create the tax-preparation program that evolved into the highly acclaimed Kiplinger TaxCut software, now published by H&R Block. (Kiplinger has no association with Split-Up.)

Tax help ranges from the relatively simple--such as showing how shifting the right to claim children as tax dependents from one spouse to the other affects each spouse's tax bill--to the tricky. Caine admits that the alimony-recapture calculator "helps people who want to legally disguise a property settlement as alimony." (Alimony may be deducted by the person who pays it; property-settlement payments are not tax-deductible.)

You still need a lawyer. Disclaimers in the software take pains to make it clear it's not designed to give legal advice nor substitute for an attorney. In fact, the Web site includes referral listings to lawyers, mediators and other professionals.

But Caine is confident that the Split-Up Web site and software will hold down users' legal fees by giving them a better sense of the issues involved in a divorce. "This is basic training," he says, noting that time saved not asking an attorney rudimentary questions is money saved. And when it comes to financial issues, he says: "Attorneys who specialize in domestic relations have negotiating skills. They typically do not have skills in financial matters."

Vivian Gray is a believer. Gray, a 34-year-old Massachusetts woman with one child who asked us not to use her real name, is nearing what she hopes is the end of a divorce that has dragged on for more than two years.

She already had an attorney when she began using Split-Up and admits that she was "spending a lot of time asking what was down the road and what terms meant: depositions and motions and filings and all this stuff." But the program changed that. "I didn't have to spend time getting the lawyer to teach me the basics. At $285 an hour, if I was saving three to five hours a month, I was saving a lot of money."

Gray says that what she learned from Split-Up allowed her to "ask more intelligent questions, and that triggers the professionals to give more focused advice. They can cut to the chase more quickly."

The program also taught her something her accountant didn't know: That because she had been separated from her husband for more than the last six months of the year, she qualified to file her taxes as a head of household. "If it wasn't for Split-Up, my accountant would never have suggested it to me," Gray says. "In fact, at first he didn't agree. But once he found out that the program was correct, it saved me more than $ 1,000 in taxes."

Top-Yielding Money-Market Mutual Funds

                             RECENT
                             30-DAY    MIN.
Taxable                      YIELD    INVEST.

1. Strong Investors(*)       6.07%    $ 1,000
2. Aon(*)                    5.90      10,000
3. Transamerica Premier(*)   5.86       1,000
4. TIAA-CREF(*)              5.84         250
5. Lake Forest               5.83       2,500
   NATL AVERAGE              5.46%

                                  WEB ADDRESS         TOLL-FREE
Taxable                             (WWW.)              NUMBER

1. Strong Investors(*)       estrong.com             800-368-1030
2. Aon(*)                    (#)                     800-266-3637
3. Transamerica Premier(*)   transamericafunds.com   800-892-7587
4. TIAA-CREF(*)              tiaa-cref.org           800-223-1200
5. Lake Forest               lakeforestfunds.com     888-295-5707
   NATL AVERAGE

                      RECENT   TAX. EQ. YIELD
                      30-DAY      28%/31%        MIN.
Tax-Free              YIELD       BRACKET       INVEST.

1. Strong             4.02%      5.6%/5.8%       2,500
2. Vanguard           3.88        5.4/5.6        3,000
3. Calvert Tax-Free   3.81        5.3/5.5        2,000
4. USAA               3.79        5.3/5.5        3,000
5. Zurich             3.74        5.2/5.4        1,000
   NATL AVERAGE       3.40%      4.7%/4.9%

                       WEB ADDRESS           TOLL
Tax-Free                   (WWW.)           NUMBER

1. Strong             estrong.com        800-368-1030
Z. Vanguard           vanguard.com       800-635-1511
3. Calvert Tax-Free   calvertgroup.com   800-368-2748
4. USAA               (#)                800-531-8448
5. Zurich             zurichfunds.com    888-523-4140
   NATL AVERAGE