It is a fact that 50% of all marriages end in divorce and have done so for ages.
With the economy looking up, couples who stick it out through tough times may choose to reassess their options. When the other side of the fence looks greener, couples are more likely to split ways.
Couples that choose to separate should be cautioned that regardless of the economy, the divorce process itself is a minefield for those who fail to plan financially, regardless of whether they are a breadwinner or a stay-at-home mom.
Divorce almost always results in a financial setback for both parties, so it is important to plan ahead.
Get Early Legal Advice
It helps to know your legal rights and responsibilities as soon as possible.
An initial conference with a family law lawyer will help you to determine what to expect and the range of support you may be able to afford. After you have had this advice, you may be able to come to a private agreement about most issues arising from the separation. It is much cheaper to have your lawyer prepare a separation agreement containing your terms than to litigate.
Going to court isn’t the only way to get divorced and should be a last resort; mediation and collaborative procedures are the two cheapest ways to get the job done.
However, if you’ve tried that or divorce court is your only option, we can help you make sure that you’re prepared to come out of this ordeal with little to no debt.
Prepare a Budget and a Timeline
To avoid coming out of a divorce in debt, once you start the proceedings, don’t spend money you don’t have.
Create a budget and stick to it — but don’t forget to keep your expectations realistic. Expect money to be tight. Don’t go into divorce thinking you are going to be able to maintain your present lifestyle.
Unless you are fairly wealthy, it is recommended that you plan ahead because there will definitely be less money to live on. Also, spousal support and alimony are quickly becoming a thing of the past — so don’t assume that you will receive it.
Lawyer fees depend on how much time it takes to get the work done. And the more you take on yourself, the less you will spend on your lawyer and on their staff.
Don’t be afraid to ask a lawyer about their fees and what they can do to save costs. Your lawyer may also have less expensive staff to help with non-legal questions.
To cut down on the amount of time spent in your lawyer’s office, take the time to write a chronology of events. Writing a timeline helps your lawyer highlight what they need to know for your case. Your lawyer’s staff can review this at a lower rate and summarize parts for your lawyer to save on their more expensive time.
When it comes to the courtroom, the wait time to appear before a judge gets quite expensive because of lawyer fees. There could be multiple cases scheduled at the same time as yours, and a one-hour hearing can easily take up to six hours, which you will be billed for.
To reduce the time of your hearing, have your friends write statements.This will help your lawyer figure out who to use and what to ask.
Keep Open a Line of Communication, If Possible
In many households, each spouse will take on certain responsibilities. Often, one person will take charge of paying the bills and managing the finances, while the other takes care of other responsibilities.
When both roles are relinquished to a single person and the other leaves the family residence, it can spell disaster for the spouse who is now out of the loop. That spouse may no longer have access to the records and no longer have a true sense of the monthly expenses.
If you have a spouse you can trust, be willing to share needed information with him/her. Don’t hold back with your attorney either. If you aren’t willing to communicate issues, it will only cost you more money for your attorney’s extra work.
Remember: Attorneys bill by the hour and they aren’t cheap.
Divide and Conquer All Finances
Make sure you have information on everything that will affect your financial future.
Organize your information in one place ahead of time so you won’t have to scramble at the last minute.
If you don’t have access to your individual or shared financial information, start with these tips:
- Start an inventory of valuable property
- Gain access to statements from all bank accounts and important records
- Hire a business valuation expert to evaluate privately held businesses, stock options, and partnership shares
- Hire an appraiser to assess real estate
- Hire an expert to value other hard-to-value items
If you overlook these valuable items, you will get less than your fair share when the division of assets occurs. This process will also ensure that neither of you is able to hide assets from the other.
However, mingled finances mean trouble in the future — especially if your spouse later defaults on a car loan payment, goes bankrupt or becomes disabled.
Cut or minimize any joint accounts you have with your spouse before the divorce. It might be too late afterward. If you can’t get rid of the account then, look into getting those accounts in one spouse’s name only.
Debts do not go on hold because of divorce either.
Just because you have agreed that one of you will pay those debts does not mean that the lender will differentiate between you and your spouse when they are dinging credit scores, etc.
It is best to pay off all shared debts before the divorce becomes final so that there is no longer a need to communicate post-divorce.
Don’t Sweat the Little Things
What else can you do to save money?
Don’t fret about the $50 coffee table you want simply because you want to be petty. Be willing to negotiate and do not make it about getting all you can get. Remember, equitable does not mean equal. Also, more lawyer time means more lawyer fees so you may have to settle for less to save money in the long run.
The key to a quick settlement is a focus. When both spouses focus on the details, rather than on the broad concepts, the case moves rapidly to a conclusion.
Start thinking details. Start making lists.
That way, you’re going to be talking about specifics when you’re communicating about the case. And the next thing you know, it will be settled.
Always keep in mind that the less money you spend in court and in the lawyer’s office, the more money you get to take away. And that’s a win for everyone.