United States divorce rates are running 50% according to published reports, with money conflicts cited as a high-ranking cause. Accordingly, it’s worth spending a few moments reviewing pro-active strategies that can impact the final legal, financial and emotional results.
Contrary to what TV dramas and the movies might have you believe, lawyers aren’t always in court, and they don’t have a penchant for drilling people on a witness stand. Though only about 5% of divorces go to court, each attorney has their own style and generally practices a certain way. That’s why it’s important for you to have an idea of how you might want to get divorced before choosing your attorney.
There are four basic ways to achieve a legal divorce:
One thing is for sure: the more you and your spouse can communicate and negotiate together, the less costly the divorce, and the more options you’ll have for how you want to get divorced. Having an idea of where you fall on this spectrum will make it easier when you’re interviewing attorneys.
First, it lets the attorney know if they want to take you on as a client and which one of the above divorce routes make most sense for you financially.
Second, it’s important to realize that a large part of the divorce is financial in nature and the agreements you make are going to be based on two things:
That’s the foundation of how negotiations begin, so if you can have a handle on that before your first meeting, you’ve got a great head start for immediately accomplishing things after hiring your attorney. If you go to your appointment without these completed, your attorney will hand you a blank form to complete. Here’s a key piece: if you seek out and hire a Certified Divorce Financial Analyst® or CDFA® professional, they can help you gather the information, verify it, and transcribe it correctly. A CDFA® practitioner will charge up to half the hourly rate of an attorney and the product will be complete and verified by a financial expert. Otherwise, your attorney will not verify your financials. That is not their job. They will, however, charge you their hourly rate to gather the documentation through the legal process of discovery and review the documents. Save yourself the trouble and the money by just doing it upfront.
Another issue to consider is spousal support. In many divorce proceedings, the budget and net worth statement numbers determine the spousal support. If this applies to you, it’s extra important to get this right. Oftentimes, attorneys will argue that the receiver of support has forecast excessive costs while the payor has underestimated them. A CDFA® professional can help you use exact numbers – no argument necessary.
Having an accurate budget completed at the beginning of the process will also mean that your attorney can immediately start helping you to settle who’s going to pay what while the divorce is happening. Even though your life is on pause, the bills are not. Having an idea of what you want in regards to how the bills get paid before seeing your attorney will give you peace of mind that you’re not going to be stuck in a lurch.
In addition, having the pre-divorce budget and net worth statement sets you up for success during the negotiation process because the financial expert can continuously update these documents to illustrate the effects of a proposed settlement agreement. Specifically, they can show whether or not you’ll have a deficit in cash flow at the end of the month (a.k.a., if you take this deal you won’t be able to pay your bills). They will also be able to show you a net worth projection according to the proposed asset split. This is important as you don’t want to take all of the slow-growth assets while your spouse walks with the high growth assets (a.k.a. cash vs. stocks).
Divorce consistently tops every list of the most stressful events of a person’s life. Even a great network of supportive friends and family can’t take the place of an objective expert in the fields of therapy or psychiatry. A therapist can help you process your emotions effectively so that when you’re making important decisions, you can be as clear-headed as possible.
When a couple splits, there are really three divorces:
Find an expert in each of these categories and you’ll be setting yourself up for a split that doesn’t make you say, ‘What was I thinking?!’ years after the settlement has been signed.
This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.