We all have friends that have claimed to have been “taken to the cleaners” during their divorce. Be it high legal fees or literally losing everything they own to their ex, their story can make you twinge a bit more when your spouse tells you that he or she wants a divorce. Luckily, though, there are ways to keep your divorce affordable as long as you two can communicate, negotiate, and keep an open mind.
Here are a few keys to keep the divorce affordable and as painless as possible:
- Open lines of communication – if you hide things from either your spouse or your attorney, you are bound to create hostilities with your ex and a lot more legal hours for your attorney. Everything is going to come out anyway, so be as upfront and transparent as possible.
- Avoid unwanted confrontation – remember the movie, The War of the Roses? Something such as this is to be avoided at all costs. We realize circumstances behind the divorce may have led to hard feelings, but they really do need to be put aside or the divorce will drag on forever, costing both you a lot more money.
- Expectations – you are going from two incomes to one, so do not expect the same “quality of life” after the divorce, especially if there are children involved. There will now be two households, possibly an additional car, and extra childcare needed. Realize this as you go into the divorce so you are not caught off guard once the settlement has been finalized.
- Joint accounts – once it becomes clear that divorce is imminent, you should dissolve all joint accounts and open individual accounts from that point forward. You do not want your money comingled at this point, so the quicker the better. You may have some investments accounts that cannot be split and will become part of the settlement, but the rest of them should be dissolved as long as there are no legal repercussions for doing so.
- Inventory everything – you need to know what you have so it is all included in the settlement. This goes from physical assets to all financial assets. Once you know what you have, you will have a better idea of how things can be split and what type of bargaining power you will have during the divorce negotiations.
- Fair value – some assets will have tax liabilities if they are split during the divorce. Other assets may have a higher future value, such and IRA account, then the current cash value. If you have significant investments, speak to your attorney about consulting a specialist to evaluate the accounts to establish a fair value so you can create an even settlement.