“Marriage is grand, divorce a hundred grand” is the cautionary pronouncement any respected financial expert will give to a client considering divorce. Without a financially based plan of action, divorce can ruin you. Just ask Ginita Wall financial expert and founder of Second Saturday. She has gathered divorce experts for more than 23 years to help inform women in San Diego about the perils of divorce without a carefully considered plan of action.
In marriage, as in divorce, finances can be a divisive battle ground. It’s no surprise that couples faced with shrinking household resources due to job losses, the depressed housing and stock markets, together with gaps in values over what to spend precious resources on, can turn on each other once the big “D” bomb drops. If you thought the loss of 40% of your net worth as a consequence of the economy was hard to swallow, try living with yourself after you wake up from your divorce battle only to discover your divorce just consumed the rest of your resources.
If you are among the super rich, you will escape financial ruin. If you are so poor you have no assets and little or no income to fight over, then the available free resources will most likely serve your needs. For most of America’s middle class however, you have just enough to fight about and not enough to live on should you fight.
SO HOW DO YOU WIN THE WAR WITHOUT ENGAGING A BATTLE?
- Think of your divorce as a dance rather than a game of hide and seek; no one is supposed to win. Okay so perhaps not one of those high school dances where it’s all about clutching and not about moving, instead think of the real discipline and counterparts of a dance; let go when the music stops. Agree to agree on at least three things: you no longer want to be married, you want the children cared for, and you want out without squandering the legacy you worked so hard you create.
- Who’s on your team? Let’s face it, you’re probably not seeking a divorce unless you have a fatal breakdown in communication. One or both of you is so done that you are willing to let go of the dream your marriage encompassed, risk financial ruin and other losses, just to get out. Let’s be real, you may not be able to get very far in the information gathering and sharing stage without support. This is often the point where fear gripes one or both of you and one or both ‘lawyer up.’ You stop co-operating or even talking to each other and yet in the end the same information will need to be disclosed. Do you really want to pay $700 – $800 an hour for your two attorneys to gather your information and talk to each other about your life’s savings?. Let’s build you a team you can trust to work collaboratively with you.
- It’s time to talk turkey. In a marriage it’s common to divide tasks which means each of you has acquired specialized knowledge about some aspects of your life. The other may lag well behind because of the information gap. When you operated as a couple it was more efficient to divide tasks; but now it’s time for full disclosure, transparency and accountability. Your first goal is to gain a comprehensive picture of your financial reality. What are your assets, debts, income stream? The gap between the clear reality of how much money there is to go around and how much each of you think there is to go around is an argument you just don’t have to have. Focus on gathering all of the information before any discussion about distribution and spending priorities.
- Think outside your box. As a couple your focus was on building a box, one that met all of your family’s needs. As a divorced family you will need 2 boxes. You need to let go and rethink your game plan. Start with the goal of creating a fresh clean start. Jointly order your credit report to identify all debt https://www.annualcreditreport.com/cra/index.jsp. Then work together to clean it all up. Consider the pros and cons of selling the house to create two homes. There is value in severing your liability. You may even need to explore a short sale or a foreclosure or joint debt relief before you divorce.
- How sick is your divorce? Now that you have all the information step back and give yourself time to adjust your expectations. Take stock of what you can agree on and the issues that still divide you. Take the temperature of your patient. How sick is your divorce? Do you need an attorney and if so do you need one with specialized knowledge of issues that divide you like how businesses earn their income, long term care for special needs children, timing a bankruptcy with your divorce, or some other complex legal issue. Ask yourself could you resolve this with a skilled mediator. Do you agree and just need a service to create a legally binding agreement? You wouldn’t see a brain surgeon for an ingrown toenail would you?
Whatever the reasons for your divorce, you are dissolving a partnership, but in most cases continue to share resources to support your children and or, the journey of the other to autonomy. As a divorce coach who was a trial lawyer and trained as a mediator Laura can help individuals and couples make critical decisions and access the support they need to create a high integrity, low conflict legally binding resolution in a cost conscious way. You can find our more about the benefits and value of using a Laura McGee to facilitate yor divorce process at LeaveStrong.com
Great article with super advice. Getting your information all disclosed before ending the marriage is a wise way to start the process. There will be fewer surprises and you will know where you stand as a couple without paying lawyers to get disclosure. The longer the divorce drags on, the more angry and withholding exes become IMHO. The mediation is a great way to work it out if you’re agreeable and somewhat on the same page. However, from my own experience, not many couples are in that boat. #3 and #4 are the best tips.
Laura, what would you advise couples to do if they jointly own a business as well? In my experience, determining the VALUE of the business can become a battleground. This adds a whole other layer to the process. Phew, I know from my own experience.
Hi Lisa,
Thank you for your feedback and question: “what would you advise couples to do if they jointly own a business”
I so agree with you that when a couple or even one within the couple owns a business, divorce can become a complex battleground. What you declare for tax purposes is rarely the real income stream the family is living on as the company usually carries a range of expenses, like medical, disability and life insurance, vehicle, entertainment and often other expenses. If you own a business together you will need a financial expert to help you unravel two aspects of the business: the true income stream and the asset value of the business. Ideally you will interview 2 or 3 experts together and select just one to act as an impartial forensic analysist, as the costs of battling experts often defeats the whole purpose.
Thanks, Laura. That sounds like great advice. Unfortunately, we messed up and didn’t go about things the right way so it is currently in courts…But if I could do it over again I would do it that way.
Suing your spouse to end your marriage has always struck me as absurd. Serving Documents, Applications, Answers, Requests to Admit and Affidavits. Give me a break! The participants were married to each other for crying out loud. Even if there are now irreconcilable differences, it doesn’t mean that they cannot engage in a civilized discourse and provide for the orderly division of property and agree upon necessary and adequate child or spousal support within the framework of the law.
Any honest trial lawyer will tell you that litigation is crippling in the stress it creates. Mediation, as compared to litigation, is a walk in the park. Smart Divorce Solutions mediators insist upon respectful, non-threatening communication and the process is tolerant, enlightened, and downright refined as contrasted with traditional lawsuits.
Thanks for chiming in Ken. I couldn’t agree with you more. The entire litigation process both enables and encourages costly conflict. Divorce in California is supposed to be “no fault” and yet the entire litigation process feasts on fault. As a mediator you are bringing dignity, integrity and civility to an otherwise undignified process. What geographic area do you serve Ken?
Laura:
I have offices in the Greater Toronto area in Ontario, Canada
Good to know Ken! I am from Ottawa. Did my undergrad in Winnipeg then I went to Law School at UBC in Vancouver where I practiced law and trained as a mediator. I moved to the San Diego area 8 years ago. I remain connected to both countries and work in both as a dual citizen. So good to know a like minded professional is out there! I’ll keep you in mind for clients looking for support with mediation in the Toronto area.