So many couples stay married longer than they should because they fear that they can’t afford a divorce. They fear they can’t afford to hire a lawyer. They fear they can’t afford to maintain a separate household. They fear the unknown.
Understanding the process of divorce, understanding your options, and understanding that the actual costs of filing for a divorce are often less than $1,000.00 is half the battle. The other half is avoiding costly mistakes that often occur during a typical divorce. The first Rule I always tell my clients: Don’t talk to your friends and family about your divorce. Well-meaning friends and well-intentioned family members often make matters worse by offering their own opinions and advice that is emotionally-driven and rarely neutral. These conversations usually result in poor decision-making that is not based in reality. What’s the second Rule? Call a mediator before calling a lawyer.
Similar to the conversations you will have with those well-meaning friends and well-intentioned family members, lawyers (who are paid by the hour and who will justify their actions by arguing that they are “zealously” representing you) are incentivized to workup your case. There is no motivation for an attorney to quickly and efficiently resolve the disputes you have with your spouse. And so, after you drop your $5,000 retainer and the first few filings are complete, you often will receive a phone call stating that your account needs to be replenished before any further work can be performed. Seriously?
Whether you are already in the process of litigating your divorce, or are merely contemplating a potential divorce, if you want to protect your financial (and emotional!) assets, consider avoiding the following critical errors:
Error #1: Hiring a combative lawyer instead of a collaborative attorney. Divorce settlements are determined by Equitable Distribution laws, which mathematically arrive at “fair” figures. Your spouse will not be financially punished for bad behaviors during the marriage. A combative lawyer will only serve to drive up the cost of your divorce, ultimately leaving less in the marital pool to split. In the end, the divorce will take much longer to achieve and will cost more than you planned.
Error #2: Failing to consult with a mediator. If your assets are moderate, joint custody is workable and your spouse is agreeable to a fair settlement, mediation will save thousands of dollars in legal fees and emotional turmoil, and will provide more flexibility than an adversarial legal process. Mediation works for pro se litigants (those individuals who are representing themselves), or, with represented parties. Note, however, that mediation will only work with two parties who want to resolve their disputes. It will not be successful if one spouse is hiding assets or income, or is unwilling to consider the needs of the other.
Error #3: Playing the part of the victim. Ignorance is no excuse. Make sure you have access to or copies of important financial documents, including property and investment portfolios, insurance policies, bank records, credit card statements and tax returns. If you have concerns that your spouse may attempt to liquidate or retitle marital assets, take steps immediately to protect yourself by seeking a court restraining order.
Error #4: Forgetting to consult with a financial planner. If you underestimate your budget, you will underestimate your financial picture. This information is critical when determining support needs. Consult with a professional financial planner, who will be able to project all of your expenses and help you prepare an accurate budget and financial picture.
Error #5: Using your attorney as a therapist. Yes, we are by education “counselors-at-law.” However, if you are using your attorney as your therapist, you are overpaying for the advice! Every call you make, every text and email you send are being logged and billed at significant hourly rates ($250 – $500/hour!) Lawyers are not skilled therapists or financial planners. If you need support, contact a professional in the area of need.
Error #6: Failing to project your “post-divorce future.” It’s a fact that two divorced households cost more to operate than one marital home. Proper financial planning will help you transition from married life to single life by prioritizing your financial goals and developing reasonable budgets to allocate your financial resources.
Error #7: Failing to protect your settlement. Premature death or disability of your former spouse can result in loss or modification of maintenance, child support, or other settlement awards. Consider obtaining life and disability insurance policies that will guarantee your payments and your family’s security.
Error #8: Forgetting to update your estate documents. Have you thought about changing the beneficiary to your life insurance policy? Retirement accounts? Wills? Often people forget to make these important changes, resulting in ex-spouses inheriting a winfall intended to be passed along to children, a new partner or a favorite charity.
Error #9: Failing to use technology. There are several computer applications that will evaluate whether a settlement is equitable, and will help you project future financial views. Before entering into a settlement, it is important to consider assets, incomes, budgets, maintenance and child support, taxes, retirement plans, investments and educational expenses. These programs will help you create comprehensive and realistic analyses of your post-divorce lifestyle.
Error #10: Attaching emotions to things. Your marital residence, a piece of artwork you both obtained during the marriage, or a 1950 Chevy are all things that have value to you or your spouse. However, before spending a lot of time, effort and money fighting over these things, consider the actual value of them to you personally, whether you can afford to maintain them on your own, and whether you just want something to be vindictive and hurtful to your spouse. After considering the financial impact to you (property taxes, maintenance, etc.), you may be better served to let your spouse keep it.
Whether you are thinking about a divorce, are in the middle of a divorce, or have post-divorce issues, you should always think about the financial impact of each move you make. Think strategically in the bigger picture, and avoid making emotionally-based decisions. If your actions are being solely driven by a need to hurt the other person, you probably are not making a sound decision. Lastly, consult with a neutral third party, who is able to provide advice objectively.