Researchers for a University of Utah Report on Divorce cite the following statistics:
- About one in three women who own a home and have children at home when they divorce lose their homes.
- Three of four divorced mothers do not receive full payment of child support
- About one in five women fall into poverty as a result of divorce
The Report goes on to say ” Women at the crossroads of divorce should evaluate their financial situation carefully. Good preparation for the financial challenges of divorce is important to minimize its negative effects.”
In my twelve-year experience as a Financial Divorce Specialist, I have observed significant differences in the manner in which men and women face the divorce process. Although both can let emotions get in the way of making good decisions, my experience shows that women face different and larger challenges in the negotiation process.
For women to financially survive their divorce and thrive post-divorce, you may want to heed the following warnings.
Understand that your marriage has morphed into a business deal
Sad but true and whether you’ve been married for 10, 15, 20 years or more, your family finances will be whittled down to an enforceable Property Settlement Agreement; and, you cannot expect your spouse to look out for your interests. It may be difficult to think about separate accounts or removing your spouse’s name from charge cards; however, YOU are at risk any time you hold a joint interest in, or have legal responsibility with, or are financially dependent upon your ex-spouse.
What happens in the future if your former spouse defaults on payments, becomes disabled, goes bankrupt or dies. You should consider these possibilities that could have a significant impact on your financial position and take appropriate measures to protect your interest (and that of your children).
Do not succumb to pressure to sign an agreement
Keep telling yourself, “once I sign, it’s over; there’s no turning back.” It is difficult to financially rebound from a divorce and the more information that you have prior to signing an agreement, the better your outcome will be. “But I cannot afford an attorney and/or a financial divorce analyst.”
Many divorce attorneys and divorce financial planners will conduct initial consults at their hourly rate. You do not need thousands of dollars upfront for a Q & A session.
An initial investment of $300-$500 may produce $1,000’s of dollars in support or additional marital property. The divorce advice you receive may also provide you with the peace of mind that you are making the best decision for you and your family. Ask if the professional will work on a fixed-fee basis. What are the other alternatives to pay for fees?
- Ask relatives or friends for a short-term, bridge loan
- Apply for credit based upon your joint income, if you are still “jointly” paying bills
- Sell unneeded personal property*
- Borrow from an employer retirement plan
- Cash in any Roth or Traditional IRAs*
*These can be accounted for in the final agreement in an equalization of assets.
Hire a Divorce Team (Mental Health Professional)
Divorce is a 3-legged stool consisting of the legal, financial, and emotional issues. If done properly, the total cost of your divorce will be much more cost-effective if you hire experienced and skilled specialist in each field.
Let’s look at your attorney as your GP Doctor. He or she says that you need brain surgery. Do you want the GP to do the surgery? In this situation, you ask for surgeon referrals and the GP follows up with you at a later date. It is the same with divorce.
Divorce attorney practice Family Law. The reality is that they can grow weary of hearing how bad your soon to be Ex behaves and, they’re listening to and billing you at probably at least two times the rate of a mental health professional. Get referrals for these specialists and work out your emotional issues with them prior to or during settlement discussions.
Hire a Divorce Team (Financial Divorce Specialist)
Certified Divorce Financial Analysts™(CDFAs) and Financial Divorce Specialists are trained in the legal, financial, and tax issues of divorce. Their focus is on how you will financially survive your divorce under various settlement scenarios. Through financial analysis, they become your safety net providing supportable responses to these questions and more:
- Am I going to be financially ok after the divorce?
- When or will I be able to retire?
- How will my family financially survive post-divorce?
- How much support do I need – short-term, long-term?
- How much will I have to pay in income taxes?
- Should I take the home or retirement funds?
- What can I afford to pay for housing, post-divorce?
CDFAs and CPAs need continuing education hours to maintain their licenses. These classes keep them abreast of current trends and financial and tax strategies in providing divorce financial planning for their clients.
Women, especially those who have been “kept in the dark” about the family finances, face more and steeper challenges than men. Being aware of the financial pitfalls and engaging the services of a CDFA™ could make the difference of just surviving or thriving after the divorce.