Thinking About the Financial Issues of a Divorce

Thanks to New Jersey Family Issues for its Divorce is around the corner — how do you protect your financial interests while your marriage dissolves and pointing me to The New York Times' Financial Decisions to Make as You Divorce.

So this week, I assembled that list, with help from readers and members of the Institute for Divorce Financial Analysts. The institute certifies financial planners and other professionals who specialize in helping people whose marriages have ended.

You may be willing to pay any price to remove yourself from a toxic marriage with the least amount of haggling. Many more of you, however, are probably seeking an equitable split, but have no idea what to budget for or evaluate.

So this list is a place to start. Please post additions to it in the comments with the related post on the Bucks blog.

Give the whole article a good read, please.

Missouri Divorce & Family Law Blog also published a post on financial issues -  The Financial Aspects of Divorce: Why It usually IS "All About The Money":

...There are so many financial aspects of divorce that have to be balanced that if parties aren’t careful, they can end up in a big money mess. Here are a few of the big ones:

1.       2 households instead of one: Before a couple or family divorces, they live in one residence with one set of bills and expenses, paid by however much money the couple/parents bring in. Upon divorce, the same level of income still exists, but now there are two mortgages/rent, two sets of utilities, two sets of grocery bills, two car payments, relocation expenses, first and last month’s rent, and so on. Basically, double or so the expenses on the same income.  It is not hard to see how difficult this is in and of itself.

2.       Debts. These days, many families are just a paycheck or two away from real trouble with credit cards and other unsecured debts, and if there are significant debts involved in the divorce, a real challenge exists. Sure the court can divide the debts and assign liability to each spouse, but it doesn’t do much good if the net marital estate is significantly reduced or eliminated by the debt. A divorce is a separation of financial livelihoods, and when possible, it is a good idea to use assets in the marital estate to reduce or eliminate debt before dividing assets. The less debt after the divorce the better for both parties, even if on paper one spouse is supposed to be responsible for it. It is a future fight or bankruptcy filing waiting to happen.

3.       Child Support: Quite simply, nobody is happy with it. If you have to pay it, it is going to be perceived to be too much, and if you are receiving it, it is perceived to not be enough.  In Missouri child support is largely a mathematical calculation based on incomes and other expenses, and to some degree it is what it is.   But regardless, it another factor affecting the same level of income pre-divorce, and it will never make a party “whole” or maintain a pre-divorce standard of living.

4.       Maintenance: Although there is no mathematical formula the same holds true as does for child support, it is probably both too much and not enough,  and it is still going to have to come out of the same pot of money.  Unless the parties are very well off financially to begin with, to expect the same standard of living pre-divorce is usually unrealistic. Although appropriate in some cases of long marriage, large disparities in income, or other factors, maintenance in Missouri is awarded in a small percentage of cases.

5.       Health Insurance: Regardless of your politics on the issue, health insurance is expensive and upon divorce usually a former spouse cannot remain on the other spouse’s health insurance. So, unless both parties can get affordable health insurance, if such a thing exists, then this can be a big financial factor that likely may only have a handful of undesirable solutions.

6.       Attorney fees and case costs: On top of all of this, the divorce is a direct expense in terms of attorney fees and costs associated with the case. If the case is contested, then the total cost on the family is the sum of both spouses total investment in the case. Attorney fees are not usually awarded, which is all the more reason to try to approach the case in an informed and rational way, and try to keep costs and conflict down. The higher the conflict, the higher the cost every single time.

Missouri Divorce & Family Law Blog gives some good advice at the end, people "be smart and rational about how to separate financially and view their situation in a realistic way."

I am intrigued about Divorce Shield's message - even if  I do not feel comfortable recommending the site to clients.  That may be a quirk of my personality - I do not have the same reaction to Dollars of Divorce (on Twitter here).  Another site to look at for information is:  Faggio Financial.

Using an accountant and your lawyer ought to get the same result, but I leave that decision to you.  The thing is do something!