An excerpt from the seminar “Second Saturday: What Women Need to Know About Divorce”
Each year, nearly 2.8 million men and women go through the emotional and financial trauma of divorce. During divorce, many women are concerned about financial survival—and with good reason. Studies show that in the first year after divorce, the wife’s standard of living may drop almost 27 percent while the husband’s may increase by as much as 10 percent.
Many factors combine to lower women’s standard of living after divorce. Child support may not be adequate to cover the true costs of child rearing, and she might have lost many important years of career growth, making it difficult for her to get back on her feet after divorce.
Advance planning goes a long way. By familiarizing yourself with the twelve financial pitfalls of divorce, you can save yourself a lot of heartbreak—and hassle—in the future.
1. Not enough cash. Expenses will begin to mushroom as soon as the divorce process starts. Legal fees, court costs, therapist bills, new living expenses, and myriad other costs will drain your financial resources. Money previously used to support one household must now stretch to support two. If you are contemplating divorce, now is the time to begin amassing the funds you’ll need to stay afloat.
2. Too little preparation. Divorce is a long, complicated process that requires careful preparation. Before you jump in head first, consult with legal and financial professionals and read books about the subject. Think about the timing of the separation: Is your husband due a bonus or other windfall in the near future? Don’t separate until after it arrives, so it will be community property. Think about Social Security: If you’ve been married nine years, you might want to stick out the last year, so you can collect on your ex’s earnings record. Finally, don’t just pack your bags, load up the kids, and drive away in a car that needs four new tires. Before you separate, buy the clothes you’ll need, perform maintenance on the car, and fix the kids’ teeth.
3. No records. The three most important words during divorce are: document, document, document. Try to obtain copies of all financial records before your divorce begins. Make a clear copy of all tax returns, loan applications, wills, trusts, financial statements, banking information, brokerage statements, loan documents, credit card statements, deeds to real property, car registration, insurance inventories, and insurance policies. Also, copy records that you can use to trace your separate property, such as an inheritance or gift from your family. These assets will remain yours as long as you can document them. Copies of your spouse’s business records can be a treasure map showing you where the hidden assets are buried.
4. Overlooking assets. Don’t overlook any assets—half of everything is yours! Even if you don’t want an asset, it can be used to trade for something you do want. Inventory safe deposit boxes; track down bank and brokerage accounts; review pay stubs, retirement plans, and insurance policies. If your spouse’s business generates a lot of cash, engage a forensic accountant to look for telltale signs of additional income. Don’t overlook hobbies or side businesses that might have expensive equipment or generate income. If you have a PHT degree (Putting Honey Through), you might be entitled to some reimbursement for the cost of his tuition.
5. Ignoring tax consequences. Should you take monthly alimony or a lump sum? Should you take the brokerage account or the retirement plan? Should you keep the house or sell it now? Who should pay the mortgage until it sells? Don’t ignore the hidden tax costs of divorce in making these decisions. Your situation may require some calculation by an accountant to determine if you are really getting the best deal. And, if there’s a chance that your past joint tax returns omitted income or overstated deductions, you may want to seek an indemnification clause to protect yourself if the IRS decides to audit.
6. Ignorance is bliss. During divorce, ignorance is certainly not bliss—instead, it can be very, very expensive. Don’t be a passive observer of your own divorce. Doing as much as you can by yourself will help you recover more quickly from the divorce because you will have a healthy sense of control over the process, be focused on practical things, and be working with your ex to get things done. Also, taking an active role in the negotiations will help you to reach a better settlement than “letting the attorneys handle it.” You will have less conflict and litigation after the divorce, better compliance from your ex, and better sharing of information about the children. Your attorney may give you legal advice, but all of the decisions are ultimately up to you.
7. Mixing money and emotion. During this trying time, it’s easy to confuse your feelings with the facts. Try to be as dispassionate and businesslike as possible. View your attorney as a paid professional rather than a friend or confidante. When your grief is overwhelming, go home or to a friend’s house, not to your attorney, who is billing you at his normal hourly rate. Make property division decisions based on your own long-term best interest, not out of revenge. It won’t make you happy to declare war on your ex. Make an effort to bring the divorce to a successful conclusion with as little rancor as possible. A nasty divorce benefits only the attorneys.
8. Not fighting for what’s yours. Women tend to be supportive and sensitive to the needs of others, to build bridges, and to “make nice.” These tendencies often get in our way during divorce. Divorce is about survival, not making friends. You have to insist on getting what you need and deserve. Even if you hope that you will eventually be able to reconcile with your ex, don’t bend over backwards to make it happen. Stand up for yourself and get your share. If you reconcile, that’s fine. If you don’t, you’ll still be able to take care of yourself financially.
9. Not taking control. Going through a divorce can sometimes make you feel like the captain of a leaky boat on stormy seas—there seems to be a new crisis at every turn. Use this time of upheaval to start taking control of your life. Vow never to worry in the dark—if you can’t sleep, turn on the light, pick up a pencil and paper, and write down your worries. Then, you can go back to sleep and deal with them first thing in the morning. Also, try to get a lump-sum whenever possible so you control the cash. Listen to your attorney, but make your own decisions. This is your divorce—so take control of the process!
10. Not being ready for the worst. During divorce, prepare yourself mentally for the worst that can happen. How will you cope if your children get sick? If you have to move in with your parents? If the divorce lasts for years and you lose all of your money? If your ex remarries within two weeks, moves to Tahiti, and/or refuses to pay any support? Plan for the worst so what actually happens will seem easy by comparison. Don’t panic and let your fears rule your life. Face them, and take control.
11. Not developing a career. Many women put their careers aside to concentrate on their families. After divorce, you will probably need to figure out a way to support yourself and your children. Divorce is an excellent time to get some career counseling at the local job center, university, or community college. Prepare for the expense of tuition and books while you get your career on track. Remember: there’s nothing like new knowledge and a fulfilling career to bolster your self-esteem.
12. Not getting good professional advice. Right now, you need all the help you can get! Divorce can be very complicated, so don’t try to do it all yourself. Hire an attorney who can give you excellent advice—even if he or she isn’t the most inexpensive. Engage a forensic accountant if you think there might be hidden assets. Find a good therapist to help you emotionally. Hire a divorce financial professional to help determine the best settlement options for you. Don’t skimp now on matters that will affect the rest of your life.
I will soon receive a settlement from my ex.’s 401 K in the form of a QUDRO pull. I am a school teacher on a fixed income and have two kiddos still at home. I want to pay down my house payment, pay off my car, and all other debt so that my monthly income is not so challenged each month. I have been told by my tax guy that I need the 10% penalty set aside. I read here that it is not necessary. What are the facts? Also, what is this monthly pull from an IRA option? That would increase my monthly income and avoid the big taxes. Thank you for this service. I have learned so much I did not know.
When you use a Qualified Domestic Relations Order to transfer funds from his 401(k) to an IRA in your name, you have the option of receiving some or all of the funds directly to you instead of going into the IRA. There’s no penalty if you receive the funds through a QDRO, but you will owe state and federal income taxes, which could reduce your payout by as much as 40%. And remember, anything that you take now won’t be there growing for your retirement later on.
If you have funds in an IRA, you can begin taking regular payments from the IRA early, without penalty. You have to take regular amounts that would extinguish the account over your lifetime, and you have to take those payments until you are 59-1/2 (or ten years, whichever is greater). You’ll pay tax on the funds you draw each year, but no penalty. This is called annuitizing the payment under [IRC Section] 72(t). Again, be very careful, because taking those funds early means less when you retire, so think about the future as well as the present.
16 yr married 44 yr old need help in financial issues of divorce claiming infedelity
Married for almost 18 years, two young children (7 & just turned 2) . I am ashamed to admit that I was completely clueless about finances and let him take care of everything. I don’t even know where to begin. Divorce was his idea, and I believe he was thinking about it for some time before telling me. We are trying to do this collaboratively, and do not want to spend money or time or mental anguish to have a long drawn out fight. However, I am somewhat uncomfortable with what he is proposing. He is offering me full physical custody, house and all assets within ($80,000 paid off, mortgage payment of $770/mo) savings account (only abt $10,000) and he will carry kids on insurance. In exchange he does not want to pay any child support, he keeps the investments totalling at least $40,000. This scares me, however he is threatening that if I push for support, he will push to have 50/50 with kids & house. Number one priority to me is kids, followed by keeping them as stable as possible in the house.but I need to be able to afford them! I do make more $ than he does, but am only a teacher and will be challenged to make ends meet. I am not trying to be greedy or to punish him, but want to make sure I can take care of my children. I need help weighing what my best course of action should be
Do not give up your right to child support. Can you get him to put in writing (like an email) his threats if you don’t agree to his offer? He’s using the kids and a custody judge might like to see that.
What a louse. I am so sorry. Your kids deserve better than a dad who uses them as a pawn. I should know – three boys and an ex-donor who rarely pays and tried to get custody so he wouldn’t have to pay. Now he’s stuck without any legal custody at all because he acted like a spaz. Sucks for him.
Either get a good lawyer – or educate yourself like mad. I did – went back to paralegal school to represent myself. Won my case (physical and legal custody plus child support). Educate yourself – online, anywhere!
Albeit his offer seems suspicious, take your kids, your money and begin a new life somewhere else.
I know I did with my kids and have absolutely no regrets. My situation was similar. Married 21 years, working part time earning $30K, when the Ex impregnated a co-worker. We divorced. Our kids at the time 9,13, and 15. My ex used our children as a weapon of choice post divorce, because he had a new family to support. He cut them off financially from everything they had known when we were married;private schools, music lessons etc… Housing debacle, combined with a recession I was forced to sell the family home and move six states away. When we moved, I was at $55K no child support, no alimony, and less than $45 from the short sale. Limited on money, no family or friends to help went through very difficult periods, always keeping focused on my family and learned to live modestly so I could pay for hockey, lacrosse, swimming, cello rental, and scouting fees. Seven years later, currently earn $70K, no alimony or child support EVER!!!!
In 2010, bought a newly built 1800 sq ft town home where I live with the youngest. My sons figured it out-one son attends a military academy;all expenses paid. The second son is at an ivy league school in the mid-west on scholarship with ROTC, and youngest is in his final year of high school and following in the path of his brothers. We are absolutely fine and are a very close family. Boys often thank me for being a great Father and Mother, and tell me divorce was the best thing that happened to them. My advice-keep your children very close and focus on your future and theirs.You will look back at this time and thank the universe for the opportunity and challenge to grow. Dont’ be scared you are not alone, you have your kids. You will be fine.
how much time am i allowed to recieve an education so I can support my self?
You can take as much time as you need. If you are in the process of getting a degree or certificate when you separate, the courts will usually order support based on you going to school rather than working. If not, then map out your proposed course of education so that the court can see what you are intending and ascertain that it is reasonable. That way, you might be able to avoid having the court impute income to you while you are going to school.
My husband of 19 years told me he wants to be a woman and us bi curious and can’t guarantee he won’t go for the surgery while married and desire to be with a man. All thus time I was told that he was just a lesbian stuck in a mans body. I tolerated his crossed dressing as long as it was done away from me in private. Even message boards were ok as I wanted him to be able to talk to others and have support. Well it’s not enough now. He said its only not having the money to do this or else he would. When we are out in debt a three years that could be his plan. We have one teenager. I been crying all day and he stays away from me. Told me that he can’t promise not to do that one day… I said you promised to be my husband 19 years ago fir life. He said sorry but things changed. I have no idea what to do… I am so hurt and I have my child to consider too
I have been married to a man for 43 yrs. who I gradually fell out of love with. e was verbally abusive for many years and cheated on me so many times, don’t know why I stayed so many years. Recently I fell in love (unintentionally) to a great man and want to divorce my husband. My husband is in a nursing home with Parkisons and I have told him how I feel.
Can I divorce my husband without his consent? We only have a house together. It wouldn’t benefit him to get the house because he is on Medicaid which pays for his health care at the nursing home. I just don’t know where to start.
Can you give me a suggestion as to what to do.
Thanks, Darlene
Darlene,
You need to get legal advice. But I can tell you that in most states, maybe all, if one person wants a divorce, there will be a divorce, even without the other spouse’s consent.
Ginita
thank you very much for your reply
American women in particular deserve nothing more than their asses they arrived with. The narcissistic and passive aggressive behaviors are ultra apparent these days….Bitching and complaining about their husbands as they cheat and lie to him. You women don’t deserve nearly as much as you think you do. American women have the worst reputation in the world and there is a reason why. Ugly, demanding, perfidious and rude. YOU are the downfall of Western civilization. Only the women and state sponsored thieving organizations benefit from the institution of divorce. The men and children lose. Wanna know what’s wrong with our society? Go look in the mirror! I hope all of you choke on the ill gotten gains that you steal from your husbands and children.
My husband is in a nursing home/mental facility. He threatened to slit my throat in 08/2011 and ended up in a nursing home. He did many terrible things there and had to be transferred to a nursing home that also had the ability to deal with patients with mental problems. He has Parkinson’s disease and other mental problems. I took care of him 24 hours a day for the previous 9 years before he went into the nursing home. We have been married for 19 years now. He gets social security disability and retirement. I cannot work because I am now disabled and cannot get social security because I have not worked for the past 9 years due to taking care of him and the new law regarding this. He now says that he does not love me anymore. He also has a life insurance policy that I am the sole beneficiary of. If we get a divorce, what should I ask for? Also I do not have health insurance and have many medical bills.
Please consult with an attorney familiar with the laws of your state, so that you get competent legal guidance.
Hi Ms. Wall,
I have been married less than a year and I am quite sure my husband and I will be getting a divorce, though I don’t know if he or I will do the filing. I know he will want to protect all his assets, and I have none. I literally have a few small pieces of jewelry, but I quit my job to move across the country when we got married and haven’t been able to find work since. He has been freelancing and supporting us the entire time. We don’t have any joint-accounts, my name is not on the house he bought, and he has done some stock investing since we married but I have no access to any of the information, and I’m sure my name is on none of it. I spent the little bit of savings I had on our wedding, the move and household goods within the first month of our marriage.
There has been abusive behavior, though I don’t know how this is proven or if it is necessary to bring up so long as a satisfactory settlement is reached. I have been to 4 therapists, one was a couple’s counselor that my husband also talked to. She refused us as clients based on the “emotional volatility” of our relationship and she didn’t want to be liable, and she also said she would be required to report the abuse, which she did not want to do. So I suppose she could contest, but that would require paying her for it, involving lawyers etc. I have no money and really don’t want a drawn out court case, I would prefer to settle but want the settlement to be fair. I was thinking of asking for a lump sum (are there tax repercussions?) to be reimbursed the savings I used up, including cashing out on a mutual fund because I had run out of money and my husband didn’t want to set up a joint account, to pay for my moving expenses and to pay off the credit card debt I’ve incurred. Will I be short changing myself this way? Is it fair or less than fair? And if my husband refuses any or all of this, what should I do to protect and assert my rights?
Thank you in advance for your advice.
You need to consult an attorney who is familiar with the laws of your state who can advise you. The laws of each state is different.
I did not support my husband during his PhD education although we did live together. My husband has requested a divorce and has been staying at friends’ homes for the past few weeks. This request was a few weeks after he had an affair with a 21 year old girl. I have given up my job to move cross country with him, and I am now living in an extremely rural, low-income area with a high unemployment rate.
I am searching for work, but my chances of receiving medical benefits are extremely limited. This will become a problem because I am on very expensive medication that I cannot afford without insurance (I am currently on his insurance through his job). We purchased his car by selling mine, and we were both employed and paid the car off together. I have a new car with extremely high payments that he has offered to take over for me for the duration of the loan. I do not have that in writing, so I sent an email to him last night asking him for clarification on our financial discussions to that we are on the same page. I realize an email isn’t the same thing as a hardcopy.
My husband will be returning to live at our house because it is not currently in a condition for sale (lots of little problems, wallpaper that is peeling off walls, broken windows, chipped paint outdoors, nasty lawn, etc. that will take us a month or two to repair). Friends have suggested that I contact an attorney, but I am currently unemployed. I contacted legal aid, and I cannot speak with them until I have been served papers. We don’t have kids, but we have been together 13 years (married). I recently left my job for him because he said that he wanted me home with him. My boss told me that if I quit, I will not have the option of returning.
I am scared. I don’t want a divorce but realize I have no choice but to go along with it. He can divorce me whether I want it or not, but I’d prefer that we have an amicable divorce with as little lawyer-intervention as possible. Are there any suggestions on things I should cover since I can’t afford a lawyer (and don’t want this to become a nasty fight)? Too many of my friends want me to seek alimony, but I’d rather just hand over the car payment and find work and attempt to pay for the rest of my needs (which should be difficult because the very economically depressed area I live in, I will be lucky to get a $10/hour job, even with my excellent resume and strong background in a field of work that doesn’t exist here.
We also deferred our taxes due to the difficulties in our relationship. I have handed our accountant all of my documentation (including deductibles, etc.) – he keeps putting her off with any of us. The accountant discovered that I am having the proper amount of taxes pulled from my income but he is not. He also has a consulting job and has not been putting aside any money for taxes from that job. If we file jointly, my state taxes will cover most of what is federally owed. If we file separately, once my federal is paid off, my state taxes will leave me $1000 ahead of the time while he will be $1500 behind. I don’t want to screw him over during this process, but I’m financially strapped.
Ok, this is too long. I know that the response will be that I need to seek legal assistance that I can’t afford, but it’s worth a try.