Thursday, May 4, 2017

Getting Those Ducks in a Row ~~ And Other Ways to Prepare for Divorce

When the call comes in, the innuendo's always the same.  How to minimize the financial harm of divorce before filing? The caller's usually looking for a sketchy solution.  But most lawyers are only inclined and able to give out legitimate legal options. 

A good forensic accountant once told me "paper never lies."  So if there's a depository bank or brokerage account that holds the family fortune, missing funds can be traced and/or accounted for--but at great expense. 

Quick transfers of real estate fall in the same category.  If it's to a friend or close relative, they can be added as parties to the action in many states if the judge feels there's possible fraud (piling up the fees.)

Baby ducks swim in a row behind their mother.  If one strays, the mama scurries back to corral the straggler. 

Above all, pick a good leader.

Here's a few more tips:

1.   Pay off debts and minimize credit card balances.  Generally debt gets spread evenly unless there's special circumstances like one-sided gambling debt or a Rolex purchased for the pool guy.  If that's the case download and save statements.

2.   Create a realistic standard of living:  This doesn't mean moving your spouse to a hovel, but if the two of you are in over your heads in real estate, consider downsizing to a home that either of you can afford on your own.  The most difficult (and expensive) divorces are those where the economic bubble must be burst in the middle of warfare.

3.   Spend more time with your kids.  If a parent is heavily trekking on the work treadmill in order to float the family boat, the opportunity cost with children is high--especially if they are going to be living with you part-time. 

4.  Go to counseling with your spouse.  You may not be able to save the marriage, but you could salvage the relationship.  Navigating your kids' minority years is far easier on them (and you) if you can learn to co-parent with civility.

5.  Establish independent credit.   Credit scores are the new black.  Check your score and work to improve it, if needed.

6.   Educate your spouse about the family finances.  Show him a monthly balance sheet.  Give her a realistic picture of the inflow and outflow each month.  It may be scary, and there may be some resistance, but be mindful that ignorance is never blissful in a divorce.

7.  Start gathering documentation.  In states where separate property is acknowledged, it's typically considered with appropriate and clear documentation.  This takes time.  So pull together those retirement account statements from the wedding year, or get in touch with the company to track your rollover documents.   This can provide your with lawyer better information when she is assessing potential outcomes.

8.  Look for a decent job or freshen up your degree/training.  It's always better (and less frightening) to be financially independent and emotionally engaged in productive work.  Spousal health benefits rarely last a lifetime.  One of the greyest areas in family law is determining how much income to impute to one side or the other.  So long as the job suits your qualifications, that issue is defined.  Just because a spouse has taken a job doesn't mean the other won't be required to assist with spousal support.  Other factors include discernible discrepancy in income, length of the marriage and age/needs of children.  The judge will respond best to a realistic plan.

Make a trusted work mentor aware of what you're going through.  Find an outlet such as exercise to work off stress. 

Above all, get yourself as mentally and physically healthy as possible.

There's a tough road ahead.