By Bonnie Sewell, CFP
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News around the transition of divorce is almost always extreme. Too many couples are still spending their assets and income to fight even though the outcome is always the same. They will be divorced minus what they spend to get there. And in a big, expensive fight, usually one party is significantly ahead of the other party financially. Feel better? Most don’t. My experience over the last few decades is that most people seek a reasonable outcome and would accomplish that if they did not get caught up in the stereotypical thinking around the very tough transition of divorce.
The laws surrounding divorce are stuck in the Stone Age in many states and a few of the worst are New Jersey, Florida, and my state, Virginia. Too many people get the legal system involved before they even understand what they’re splitting, the impact of taxes, and whatever financial foundation they will have post divorce to build on.
In 2013, can we expect couples to reconsider the very order of the divorce process? Let’s see, if I go see a surgeon about my sore throat before I go see an ear, nose and throat doc, won’t I likely be getting my tonsils out? If I go see an attorney before I see a financial expert (remember, in divorce, we’re always fighting over income and assets), won’t I end up in a legal fight? And isn’t every dollar I spend in the legal fight, a dollar I don’t have to split anymore? Even if I don’t end up in a legal fight, if I see an attorney first, I’m quite likely to end up with no less than a legal team!
Some cases cry out for legal help first. If there is documented abuse or if you have a vindictive spouse who would rather see you both lose than to move forward in a sane way, it can make sense to start with an attorney. At some point, you’ll still have to figure out what you have to split. As unqualified as I am to practice law, attorneys are almost universally unqualified to give a full financial analysis to both spouses to consider.
I believe couples who understand what’s available to split can often come up with settlement goals and seek an attorney to write executable documents. Divorce is a huge industry with entrenched legal interests controlling much of the process. Next time you read about a real divorce in the news, take note of the salivating tone as vultures circle over how much there is at stake that they had no part in building yet wish to snatch big fees from the dissolution between two people who once cared about each other.
Wise couples who are splitting want both parties to be as financially safe as possible on the other side of divorce. They also understand that everyone takes a hit when splitting one household into two. Truly wise people understand the need to live low for 3-5 years as they recover from that hit. In a fair settlement, they should float back to a good financial place after that time. There is no currency in hurting your soon to be ex-spouse in the wallet because it almost always means your total split is less than it could have been. My work in this area is gender neutral. I grew up with a father who did not meet his financial obligations and I am married to a man who meets them at great personal financial cost with no relief in sight. Why should we accept a world of extremes? We’re better than this.