Avoiding The Financial Pitfalls Of Divorce

 

Avoiding The Financial Pitfalls Of Divorce 04 12 2016If you’ve arrived at a place in your marriage where you’re certain continuing is just not possible, then it’s time to do some preparation—the key to safely navigating this life transition.

Emotions typically take center stage when a relationship has deteriorated beyond repair—and it’s safe to say that good financial decision-making and emotions rarely mix well. So while it’s challenging to deal with money issues rationally when you’re blanketed in pain, you want to give it your best shot.

There are several options to dissolve your marriage. Some couples (usually seething with anger and hurt), seek to hire the toughest and most aggressive “shark” attorney who will look to pound their adversary into pulp. The attorneys proceed to slug it out with letters, court orders and threats. Meanwhile their billing clocks are running and fees pile up astronomically faster than you might imagine possible. At the end of this lengthy and expensive process, their private lives are laid open to public scrutiny. While this might be the only recourse, it should probably not be your first.

Let’s say that more sensible heads prevail and each party decides that the best possible outcome is not punishment, but the preservation of as much wealth as possible. In this case, there are better and more rational approaches available, such as: mediation or collaborative divorce.

Mediation

A sensible—and in the long run financially healthy—way to go is to seek the aid of a qualified Divorce Mediator who can help you and your soon to be ex-spouse decide on a fair and agreeable arrangement. The mediator is an unbiased neutral third party who lines up the issues to be discussed and helps guide the discussion and process.  The main areas of discussion are:

  1. Child custody issues
  2. Property distribution
  3. Child support
  4. Alimony
  5. Taxes
  6. Retirement

Not only is the process far less costly than going the litigation route, the typical time frame is much shorter. Other benefits include privacy of both parties as they come to agreement on the terms of the divorce.

Collaborative Divorce

Another option gaining popularity is called collaborative divorce. In a collaborative divorce, each party hires their own counsel who advises and assists in negotiating the settlement. It is common for experts to be brought into the conversation, such as social workers, child custody specialists and neutral accountants.

This option can help:

  1. Stabilize difficult situations through a temporary agreement.
  2. Make the exchange of all necessary information voluntarily.
  3. The parties agree on legal procedures to keep costs down and speed up the process.
  4. Negotiate the settlement that works for each party.
  5. Create a process for post-divorce decisions.

The collaborative divorce process is one where you and your spouse negotiate an acceptable agreement with some professional guidance and support. Each spouse hires a specially trained collaborative attorney who will assist in negotiating a settlement agreement.

In choosing mediation or a collaborative solution vs. the standard litigation process, you are choosing a more dignified, private and less costly method to move your life to the next stage. With all the hurt and pain surrounded by this transition period, winding up with more money in your pocket to begin your new life sounds like a better and more secure way to go.

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