Getting a Divorce

Navigating the emotional and financial minefield of divorce is one of the toughest things you’ll ever do.

Here’s a somewhat disheartening and sobering fact: the divorce rate in Canada has doubled from that of the early 70s. While the legalities of getting a divorce may have become somewhat easier in the past 30 years, the financial ramifications remain the most intimidating and potentially devastating aspect of ending a significant life partnership.

But with proper planning and expert help from professionals specializing in financially equitable divorce settlements, you can increase your chances of arriving at a settlement that fully addresses your long-term financial needs.

Developing comprehensive insight of the short-and long-term financial effects of divorce can save valuable time, money and distress, especially if the process is conducted early in the legal proceedings. Many separating couples seek individual legal assistance before assessing their financial situation. While lawyers serve a crucial role as individual legal advocates, they are not necessarily there to explain financial consequences in detail.

Misinformation and misconceptions about the divorce process can be detrimental. Many have false expectations that they will be able to secure a divorce settlement allowing them to continue with their accustomed style of living. Financial divorce analysis helps to ensure a good, stable economic future and prevent long-term regret with financial decisions made during the divorce process.

It’s important to realize that divorce is the breakup of an economic unit, as well as a family unit. The process should be approached as a dissolution of a financial partnership, with each party attempting to remove the emotions from the process in order to develop a workable plan. There are three common emotions that are prevalent in the beginning stages of a divorce: fear, anger and guilt. It can be a role of the CDFA™ to recognize these emotions, determine where they are coming from, and help defuse them.

Here are a few key financial elements to be aware of when going through a divorce:

Gather all financial and property records. Obtain records of all bank, and brokerage accounts, insurance policies, retirement plans, tax returns, and other financial data. Develop a comprehensive list of all your property and assets, including furnishings, art objects, jewelry, and investments. Compiling these records is a good first step in any agreement regarding division of assets.

Think through what the divorce will really cost you in the long run and develop a realistic monthly budget during the financial analysis process. Expenses such as life insurance, health insurance and cost of living increases must be taken into consideration when agreeing on a final financial settlement.

No matter how cash-poor you are you must begin savings. If you don’t start, you’ll never regain your financial footing. Prepare a budget or cash flow analysis even if you’ve never done one before. Your new financial circumstances should be analyzed. Prepare or at least review your budget with a financial planner may be a better approach. Independent review is vital to avoid “fooling yourself” with overly optimistic assumptions.

Be aware of all tax liabilities and benefits. The monthly distribution of the financial settlement will change individual tax burdens based on the amount of Spousal Support (taxable income to the recipient and tax deductible to the payor) vs. child support (tax neutral for both payor and recipient).

Act quickly to protect your assets. Alert your, bank, brokerage firm, or mutual fund broker of the situation. They may agree not to make transactions on joint accounts without your approval. Immediately establish credit in your own name if you don’t already have it. Revise your estate plan, power of attorney, and beneficiary designations.

Keep the lid on legal fees. Don’t use your lawyer to get back at your ex. A divorce these days is really an economic issue. Most people cannot afford to pay for vengeance. Understand that the meter is running every time you call your Lawyer. Don’t waste your time venting emotional issues or sharing the latest outrage.

Set a realistic housing budget. Don’t let emotion cloud your judgment about keeping the family home. Set a realistic budget that takes into account your mortgage, property taxes, and maintenance. Divorcing women often pass up their ex’s pension in favor of the house—even though the pension may be worth far more in the future.

When a couple reaches the difficult decision that divorce is the only way to bring peace to a home, there are often strong and conflicting emotions involved.  The parties may feel anger, sadness, fear, and even relief with a resolution that perhaps has been years in the making.  All too often, however, the husband and wife are not the only people whose emotions and futures need to be considered.  When children are placed in the middle of divorce negotiations, consideration for the physical and psychological well-being of these innocent participants should be placed above every other factor.  Statistics show that 43.7% of custodial mothers and 56.2% of custodial fathers in our country are either separated or divorced.  In Texas alone, there were 58,736 children affected by divorce in 2005, with an average of 0.8 children per divorce.  Out of all of the divorces in Texas for that year, 23.5% involved two or more children. This means that there are thousands of divorcing parents just in the Lone Star State who are struggling with the life decisions that will forever impact their children.

There have been repeated studies which show the difficulties that are experienced by children whose parents are divorced.  It is not uncommon for these children to display negative behaviors such as aggression toward peers, impatience, defiance towards parents, and a regression in childhood milestones such as potty training.  Older children may choose to engage in early sexual activity and have an increased chance of experimenting with drugs or alcohol.  Also, while the husband and wife are likely dealing with fears of being alone and providing financially for their family, children are dealing with their own very real set of fears which must be acknowledged and discussed.  Kids in the middle of a divorce are often afraid of a change to their schedules, the possibility of abandonment, the need to mediate their parents’ disputes, and losing an attachment to the non-custodial parent.  The good news is that children do not necessarily have to come out of a divorce with long-term problems. Research has proven the long-term resiliency of children, even though an incredibly difficult experience such as divorce.  Parents can assist in this process by being responsive to their children’s needs and feelings, keeping conflict away from the eyes and ears of their children, and developing a child custody and visitation plan that is in the best interest of the kids.

The more you know about child custody laws in Texas, the more prepared you will be to make the settlement process a smooth and amicable one for your entire family.  Texas law starts with the assumption that joint custody, called “conservatorship,” is in the best interest of children, with one parent determined to provide primary physical custody.  While the mother has traditionally been thought to receive the benefit of the court concerning primary custody, and still has the advantage concerning younger children, recent trends have shown fathers being awarded custody on an increasing basis.  Texas courts prefer that parents agree to the custody arrangement together, if possible, as this is the optimal course of action for the children.  If the court must get involved, a family law judge will consider the following factors when determining the custody of children:

history of contact between each parent and the children mental and physical health of the parents work schedules of the parents living arrangements of each parent any history of abusive behavior preference of the child if he or she is at least twelve years of age

In addition to determining primary custody, the courts also must file a visitation schedule for the non-custodial parent.  Unless there is a history of abuse or abandonment, it is in the child’s best interest to have active involvement from, and quality time with, both parents.  The Texas Family Code has a standard visitation schedule in place, with deviations from this plan being allowed assuming that both parents agree to the changes.  For children who are at least three years old, the holidays are divided evenly between parents and the non-custodial parent has the kids two weekends a month, as well as every Thursday evening and thirty days during the summer.

No one will ever be able to tell you honestly that divorce is easy on children.  Depending on the age of the children at the time of the separation, parents can expect to deal with a wide variety of behavioral and emotional issues.  Reassuring your children that they are loved and that the divorce had nothing to do with them, keeping a routine, and respecting your estranged spouse are all steps that you can take to make a bad situation as positive as possible.  In addition, make sure you are using the legal system in a way that benefits your kids’ long-term stability and does not use them as pawns in an angry battle.  If you have any questions about the laws in Texas regarding children and divorce, please consult a family law attorney as soon as possible.

In the case where you are considering divorce, almost regardless of the reasons behind your decision, it is important that you be aware of just what is involved in obtaining a divorce in the US.

In general, the laws of each state set out specific reasons for a divorce which have to be proven before the court is allowed to grant it. This can be under a no-fault heading, an all-fault heading, and a summary heading. In recent years some less adversarial ways to approach to divorce settlements have emerged, like mediation and collaborative divorce, to negotiate mutually acceptable resolutions to conflicts for a couple.

At-fault divorces were originally the only way to dissolve a marriage, and people who had differences or problems were only able to separate, and were prevented from legally remarrying afterward. The state of New York is the only one which still requires fault to obtain a divorce. In an at-fault divorce, one party usually brings divorce proceedings against the other due to some breech of marriage regulations like adultery, abandonment or cruelty.

Comparative rectitude is the name given to a doctrine used to determine which spouse is more at fault in divorce proceedings when both spouses are found to be guilty of breaches. This kind of divorce can affect the distribution of property, and will allow an immediate divorce, especially in states where there is a waiting period required to obtain a no-fault divorce. A defense for this type of divorce can turn out to be expensive and is not usually practical since most divorces are eventually granted anyway, especially when a society comparable to that in the US is not interested in forcing people to remain married any longer. Remember, marriage in the US also has legal ramifications, so if you do not want to be married anymore, you need to get divorced, it is much more than simply taking the mental attitude of no longer being married.

Under a no-fault divorce set of rules, a marriage partner does not need to show that the other marriage partner did anything, or was at fault in order to obtain a divorce. Many common reasons for no-fault divorce can be incompatibility, irreconcilable differences, and irremediable breakdown of the marriage. In the United States, currently 49 states have adopted no-fault divorce laws.

In states that grant no-fault divorces, there may be a waiting period of up to a year before the divorce is considered final. Other requirements include mandatory counseling to see if reconciliation can be achieved if one party does not agree to the divorce, either dependent on an amount of time set by the court, or for a predetermined amount before the divorce may even be applied for,

A summary (or simple) divorce, available in some jurisdictions, is used when spouses meet certain requirements for eligibility, or can agree on important issues beforehand like if it was a marriage lasting under 5 years, there were no children (or, in some states, the couple have resolved custody and set payments for child support), there was minimal or no real property (there was no mortgage on a house or condo), the property owned by the married couple is under a threshold (around $35,000, not including vehicles), and the personal property of each spouse is under a set threshold (typically the same amount as marital property). A simple divorce where both couples agree on how the divorce should be handled and assets divided is also known as an uncontested divorce.

It is estimated that in the US upwards of 95% of all divorces are uncontested, since the two parties are able to come to an agreement (with or without lawyers/mediators) about the property, children and support issues. When the parties are able to agree and present the court with a fair and equitable agreement, approval of the divorce is almost certain. In the case where the two partners cannot come to an agreement, they may ask the court to decide how to fairly split property, deal with children and custody issues, and so forth.

Residency requirements to file for a divorce vary from state to state. In some states, like Colorado, residency requirements are very liberal to accommodate military personnel who have to move often for tours of duty, while other states, like New York, require that you live in them for a minimum of a year with the intention of making this your permanent state of residence. A spouse may separate, move to a state with divorce laws of their choice, establish residency, and file. However, this typically does not change the state in which property and other issues are decided, and it is possible for a court to decide not to hear a petition for divorce if it decides that it does not have legal jurisdiction to do so based on residency issues.

A final consideration to be made when considering where/if to file for divorce is the laws concerning the distribution of property and division of assets. States like Alabama are considered to be an “equitable distribution” state which means that all property acquired during the marriage is divided equally among the two parties. In other states, like California, assets can be awarded to a spouse from the other based on economic need, and in still others, like Alaska, even though it is an equitable distribution state, in some jurisdictions in the state, women have little or no rights to marital property. In some states, alimony is awarded to the stay-at-home spouse, where in others, alimony is paid by the spouse making the most to the spouse making the least, despite the one needing to get child support because they have actual custody.