1. People & Relationships

Twenty-One Ways To Save Money On Your Divorce

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From: James J. Gross, J.D., ML (Tax) and Jamie Lapin, CFP, CDP

The joke goes like this. Find someone you don’t like, give him or her half your net worth. That way you save $10,000 in fees for a divorce lawyer. With the divorce rate at 50%, chances are that either you or someone you know is getting a divorce. In this article, a divorce lawyer and a financial planner explain twenty-one practical ways to save money in a divorce.

  • Be your own private investigator. Chances are, no one knows your personal business – or that of your spouse – like you do. What are your assets? Has your spouse said anything to indicate that there might be money somewhere other than in your joint accounts? Where is your spouse Thursday nights? Are there records left casually around the house, in Day Planners or notes on the desk or the office trash can? Are there old retirement plans housed with former employers? Chances are that you can at least develop the questions, if not find all the answers.

  • Fill out the court financial forms. Fear is the primary cause of unreasonableness on the part of both parties. Each foresees a future in which they must live in squalor while the ex lives in splendor. The court financial forms help you to organize necessary data for today, and begin to look forward to what your expenses will be in your new life. It in turn gives you an opportunity to evaluate whether current income can support two households at the lifestyle you enjoy now, or whether a re-prioritization is in order.

  • Get a real estate agent to value your house. Real estate markets are volatile and fickle. Assuming a value for your home, beach house or investment property, or basing your assumptions on last year’s mortgage refinancing appraisal may not be an accurate picture of what your property would sell for today. Realtors do “comps,” or comparative valuations, as a part of their regular business. Or you can hire an appraiser who, for a fee, will give you a valuation of your home.

  • Ask your accountant to value a business. If you or your spouse have a small or closely held business, it may well have a value beyond the computers, desks and vehicles. The goodwill of the business (name recognition) can have tremendous value, as can patents and other intellectual property. If your spouse has an ownership interest or partnership share in a larger entity, the value of that interest may well constitute a sizeable portion of the marital estate, even if the business is not currently profitable.

  • Calculate child support. Every State has state-specific child support guidelines. While a guideline is not the same as a law, it is generally the Court’s default position, from which deviation may be granted if circumstances warrant. Support schedules are based on total income of both parents, parenting schedules (number of nights the child/ren spend at each parent’s house), child care and medical expenses.

  • Pro Se (Do it Yourself). Especially in California, this option is gaining popularity. In cases with few complications (no children, short marriage, few assets), a do-it-yourself divorce can save time and money. Talk to your county Bar Association as to whether there is a pro se division to help with the legal paperwork. Divorce is a legal matter, and you want to be sure that the court will accept your filing.

  • Talk to your lawyer's secretary. Staff bills at a different rate than attorneys, when they bill at all. For simple questions (Has something happened yet? Did the attorney get my Fax?) it is often quicker – and cheaper – to ask the secretary. Also, often your attorney will have to ask her to get the answers on paperwork issues!)

  • Talk to your therapist. Many people make the mistake of confusing the expertise of the experts they work with. Your lawyer is the best resource for legal issues. Your Financial Planner can help with economic issues. But for the emotional challenges presented by this life change, your therapist is the one with the tools to assist you. Divorce is very emotional, and we all come to it ill prepared. The rash decisions that come from the parties being so emotionally raw are the greatest undoing of a successfully negotiated settlement.

    Getting some help in taming your emotional demons – and dealing with those of your spouse— will greatly enhance the likelihood of a successful settlement. Make sure that whoever’s clock is ticking is the person whose skills can be most advantageous to you at that point. Your result will likely be both better and more cost effective.

  • Talk to a financial planner. If you were selling a business, would you come to the table without a financial professional to assist you in making the deal? For many people, divorce is the single biggest economic decision they will make, and yet they expect their lawyer to simply switch hats and become a financial expert, as needed. What’s the pension worth? How much income can I get from a lump sum deal? How much alimony will I need to stay afloat economically? What if he dies or is disabled during the support period?

    A certified divorce financial analyst will not only help you to understand the most advantageous means of dividing assets and creating cash flow, but will help you to empower yourself as you move into your new life. Many women have not handled the bill paying function in their households, and are not clear on their costs of living. Assets need to be invested post-divorce in order to create a financially secure financial future. How many women have an “inner bag lady,” and regardless of income or net worth, live in fear of poverty? Taking control of your financial well-being will help control this fear.

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