Managing Your Finances During Divorce
By Chris Kramer
As if the dissolution of a marriage wasn’t bad enough, the current economic recession has compounded filing divorce for couples across the country, Anna Prior reports in an article for the Wall Street Journal.
Financial strains are pushing some couples to separate or divorce, with other couples holding off on their legal split until their assets can better withstand the costs associated with the proceeding.
"People are staying in poor marriages because this would be the worst time to file for divorce, since they would get a much smaller piece" of already shrunken assets, according to Bob Adelman, a Los Angeles-based divorce attorney and certified family law specialist.
In fact, according to a recent survey administered by the Institute for Divorce Financial Analysts, 68% of the 270 divorce financial analysts who responded reported seeing clients who could not afford to get a divorce because of economic difficulties related to the current recession.
While many cases are uncontested divorce, many more involve the hiring of divorce attorneys and complicated legal maneuvering on both sides. In many cases, children and significant real estate investments prompt divorces to be contested. For individuals facing contested divorce, some tips can help keep costs down:
- Be an educated consumer when it comes to legal aid. Legal costs can be a significant drain on financial resources. Keep in close communication with your divorce lawyer and makes sure they do the same for you. Try to have a consultation before hiring a divorce attorney.
- Cooperate, to a point. Cooperation saves time and legal resources by forming agreements that do not need to be determined via court procedure. Consider the example of a private school, says Mr. Adelman. "If money is limited, to come in and seek private school is just a waste of time and energy. People need to be realistic about what the courts can and will order when there are limited finances."
- Be open-minded when evaluating living arrangements. While the family home has historically been the biggest asset for couples to split up, the housing market’s current woeful state has plunged property values and left many people in the awkward spot of losing enough money on a home sale to make it undesirable. As a result, splitting couples are continuing to live in the same house while awaiting a better market. In other cases, particularly those that involve children, the recent strategy employed by the divorcing stars of TLC’s "Jon and Kate Plus 8." Keep the children together in the house, but only with one parent at a time. The other spouse can take up residence elsewhere and rotate in and out. Keep in mind that this strategy takes a great deal of planning and structure to be successful.
- Hold off on cashing out assets as much as you can, as many investments are at significant lows and will probably recoup some value over time. Divide your holdings in their current state and wait for a better economic climate.
- Be flexible with spousal and child support. In cases where one or both spouses is unemployed, consider an option where child support is determined later on without a new lawsuit.
Compromise can often minimize legal expenses. Now more than ever, it may benefit everyone to talk issues through even as the divorce proceeding unfolds in divorce court.
Source: The Wall Street Journal