Divorce Coping Tools

Ten Financial Pitfalls for Women in Divorce

January 4, 2021 By Denise French, CVA, MAFF, CDFA, CRPC

During divorce, many women are concerned about financial survival—and with good reason. Studies show after divorce, the wife’s standard of living may drop almost 73% while the husbands may increase by as much as 42%. Many factors combine to lower a women’s standard of living after divorce. Child support may not be adequate to cover the true costs of child rearing, and she might have lost many important years of career growth, making it difficult for her to get back on her feet after divorce. By familiarizing yourself with the ten financial pitfalls of divorce for women, you can save yourself a lot of heartbreak and hassle in the future.

1. Believing you cannot afford an experienced attorney

Divorces are expensive. There is no doubt. The fees involved for a regular divorce with a qualified attorney are expensive – attorney fees, therapist bills, new living expenses and other advisor fees. Further, the funds previously used to support one household must now stretch to support two. If you are contemplating divorce, now is the time to begin amassing the funds you’ll need to stay afloat. Think of a divorce as a long term financial cost and plan accordingly before you file or when you first start to believe you spouse may be checking out of the marriage.

If you are not able to save cash for the divorce process, you still have the ability to hire good support for yourself. You can open a credit card in your name alone, while you are married, and use the marital income to qualify for a card. That card can be used for divorce related costs and at the end of the divorce, it is placed on the marital inventory as a debt of the marriage. You have power!! Contact Divorce Strategies Group on this topic and we will walk you through what to do.

2. Bad timing

Divorce is a marathon event which requires careful preparation. Before you act on the divorce, consult with legal and financial professionals, and read about the subject. Also, think about where you are in life. Did you or your spouse just start a business? Are you or your spouse just about to go back to school for a graduate degree and amass student debt? Life stages like this may cause you to pause on the divorce or act quickly before major community debt amasses. If you’ve been married eight years or just hit the nine year mark and your spouse is the major breadwinner, you might want to stick it out a little while longer before you file for divorce. In order to collect on your ex-spouse’s social security you must be married for at least 10 years from the date of marriage to the actual date of divorce. Finally, don’t just pack up and drive away in a car needing major repairs with old clothes on and kids who need braces. Fix what you need fixed, buy what you want to buy and get your kids situated with what they need before you leave, as much as possible.

3. No records

The three most important words during divorce are: document, document, document. Try to obtain copies of all financial records before your divorce begins. Make a clear copy of all tax returns, loan applications, wills, trusts, financial statements, banking information, brokerage statements, loan documents, credit card statements, deeds to real property, car registration, insurance inventories, and insurance policies. Also, copy records you can use to trace your separate property, such as an inheritance or gifts from your family. The corpus and the capital appreciation of these assets should remain your separate property as long as you can document them. Copies of your spouse’s business records can be a treasure map illustrating where hidden assets, if any, are buried.

4. Overlooking assets

Texas is a community property state. That means every dollar earned during the marriage belongs equally to each spouse. It matters not that the income went into your bank account, a business, a 401k or a second home – those funds belong to each spouse. Half of everything is yours! Even if you don’t want an asset, it can be used to trade for something you do want. Inventory safe deposit boxes; track down bank and brokerage accounts; keep pay stubs, retirement plans, and insurance policies. Don’t overlook hobbies or side businesses that might have expensive equipment or generate income.

5. Ignoring tax consequences

Tax consequences are one of the most overlooked or forgotten issues in divorce finance. Most financial decisions have tax ramifications. Should you take the brokerage account or the retirement plan? Should you keep the house or sell it now? Don’t ignore the hidden tax costs of divorce in making these decisions. Your situation may require some calculation by an accountant or divorce financial planner to determine if you are really getting the best deal. And, if there is a chance your past joint tax returns omitted income or overstated deductions, you may want to seek an indemnification clause to protect yourself if the IRS decides to audit.

6. Thinking ignorance is bliss

During divorce ignorance is not bliss, it’s expensive. As painful as it may be, diving in and participating in the process can help you recover more quickly from the divorce because you will have a healthy sense of control over the process, be focused on practical things, and be working with your ex to get things done. Also, taking an active role in the negotiations can help you achieve a better settlement. You will also likely have less conflict and litigation after the divorce, better compliance from your ex, and better sharing of information about the children. Your attorney will give you valuable legal advice which should weigh heavily into your decision making process, but all of the decisions are ultimately up to you.

7. Mixing money and emotion

This is really tough for women who were hurt during the divorce, however, it is crucial. Try to think of this from an unemotional, business like perspective. This is likely the largest business transaction you will make in your life – treat it as such. View your attorney as a paid professional rather than a friend or confidante. When your grief is overwhelming, go to a friend or support group, not to your attorney, who is billing you at his or her normal hourly rate. In addition, revenge is not helpful in long term planning and financial negotiations. It will not make you happy to declare war on your ex – it will likely just make you broke. Making the effort to bring the divorce to a successful conclusion with as little rancor as possible can help you financially today and in the future.

8. Not fighting for what’s legitimately yours

Divorce negotiations are not only about survival; they are about molding your long term financial future. It’s important to not let wanting to please others or look like “the good girl” get in the way of taking what is legitimately due you. You have to insist on getting what you legally deserve. Even if you hope you will eventually be able to reconcile with your ex, it is not guaranteed (you are getting divorced after all). Letting him keep all of his 401k because he’s worked so hard could put you in the poor house when you are older while he enjoys a great life. No matter your feelings, stand up for yourself and get your legal share. If you reconcile, that’s fine. If you don’t, you’ll still be able to take care of yourself financially. Taking what is rightfully yours (50% at least) is not being greedy, it is protecting your future and honoring your own value as a human being. No matter what your spouse says, you are worth it!

9. Taking the payment overtime versus the lump sum

Receiving a guaranteed, monthly, court ordered income sounds great doesn’t it? Yes, but what if your spouse loses his job? Becomes disabled? Quits his job and moves overseas to work? What if he just stops paying? What if his industry goes through 2 years of consolidation and he is laid off time and time again? What if he starts his own business? We feel like getting a lump sum is much better than a series of payments – court ordered or not. If he stops paying the court ordered support, guess what you have to do to get him to pay it again? Yes, go back to court. At some point, those court costs can be more than what you would get from him in the first place. Take the up-front money instead of the income when given a choice. You can create your own income stream for that lump sum payment or use it for other financial needs in the future.

10. Not getting good professional advice

Right now, you need all the help you can get! Divorce can be very complicated, so don’t try to do it all yourself. Hire an attorney who can give you excellent advice—even if he or she is expensive. Engage a divorce financial advisor to help you make wise financial decisions and create a roadmap for your future. Find a good therapist to help you emotionally. Don’t skimp now on matters which will affect the rest of your life.

Schedule a 30 minute complimentary consultation today to discuss your specific situation or call us at 281-505-8177 to discuss your concerns.

Lets Just Live Together

February 2, 2020 By Denise French, CVA, MAFF, CDFA, CRPC Leave a Comment

We have 5 children in our blended family and now the first of them is about to hit his 20’s and looking for Mrs. Right, I’m concerned!!! Millennials and Generation Z young adults could be the first generations of children-of-divorce. By 1983, all but 2 states had adopted no-fault divorce laws and over the next decades, the divorce rate rose to our now norm of about 50%. That resulted in many of those kids watching their parents’ divorce and suffering the emotional consequences that often accompany that. When you really consider the early years, there were few resources available to couples and families on how to go through the process in the most humane way. But let’s face it, even with the resources today, there are still plenty of ugly divorce tales out there.

So, for a lot of these kids, as they grow past their 20’s and into their 30’s, a very interesting trend is persisting. The divorce rate, the number of divorces per marriages, continues to rise but the actual number of divorces each year is dropping steadily. Why is this? Because young people are not getting married! They are choosing instead to be in serially monogamous, long-term relationships, often including children and joint home purchases, but forgoing the tradition of a recognized marriage. I understand. They don’t want to go through what their parents went through so the heck with marriage! However, the result of this when life doesn’t go as planned can be disastrous. No burden of marriage also means no protections of marriage.

Consider this: Josh and Beth have been together 4 years and decide to have children. They agree that Beth will stay home and care for the kids while Josh finishes his degree and works nights to support the family. Once he’s done and gainfully employed, the kids will be a little older and Beth will then go back to school and finish her degree.

Well, life happens, and three years into this fabulous plan, Josh is about to graduate and drops the bombshell on Beth that he’s been having an affair with a fellow student. He’s in love and just can’t go on like this. He’ll be a good dad to their children but he’s leaving her. (Didn’t see it coming, did you?) Oh, and by the way, last year they bought a home but since Beth had no income, they didn’t want her low credit score to drag down their interest rate, so the house and mortgage are in Josh’s name.

So, what’s Beth entitled to? She’s like entitled to child support. The house was purchased by Josh and now that Josh is about to finish school and have a great job he can move on with his life in house. But they had plans! They had an agreement and she sacrificed her education to pay for his! Too bad. Had they been married, she could have been entitled to half the equity in the home, possible reimbursement for half of his education expenses and a portion of anything they acquired during the marriage. But boy, isn’t she lucky that she doesn’t have to go through a divorce? Josh kicked her out a week later and she and the kids had to move home with her parents.

Now, Texas does recognize common law marriage, but you will likely need an attorney to determine if you are married or not. What does that mean for Josh and Beth? It means Beth hires an attorney to prove they were married while Josh hires an attorney to prove they were not – after they fight about being married or not they then go on to fight over the house, the debt, the kids and anything else they own. What does that sound like? It sounds like the litigated divorce the parties set out to avoid in the beginning by not legally saying “I Do”.

This is SO REAL!! We highly encourage young people who wish to cohabitate take the time to visit an attorney to walk through the legal ramifications of this prior to moving in together. A simple Cohabitation Agreement can change many things. There are free ones available all over the internet or you can visit a family law attorney for more specific advice pertaining to your set of facts. Never move in with someone without one! It could end up saving you your entire financial life.

Dealing with a Divorce: Simple Coping Tools

September 3, 2019 By Denise French, CVA, MAFF, CDFA, CRPC Leave a Comment

When I was walking through the divorce process, I felt a wide range of emotions – everything from sadness to shame to relief to anger and back again. Sometimes in a matter of minutes. On my best days, I wasn’t being very kind to myself and on my worst days, I was my own worst enemy. I definitely didn’t have coping tools for divorce.

When you are facing a divorce, some days are just rough. Maybe you didn’t sleep well, and you start the day off grumpy and things only get worse from there. Your kids are upset and it’s difficult to get to school, you spill your coffee in your car or traffic is terrible. You feel pressure and stress with your full-time job and now you must add another full-time job, your divorce process, to the mix. It’s a lot to deal with!

When you are already emotional from the changes in your life, every little thing that goes wrong can feel much bigger than it is. If you’re having a terrible day, stop for a minute, take a deep breath and take some time to be kind to yourself. You can’t undo the bad things that have already happened, but you can turn around your bad day right now. Here are simple things you can do to be kind to yourself and stop that rough day in its tracks.

Take a Break

When everything seems to be going wrong, you can stop that negative spiral by taking a break. Get out of the office if you can, go and do some deep breathing in the park or even look out of the window for a few minutes. A change of scenery can often work wonders. Practice some deep breathing and maybe have an herbal tea or a glass of water. If you have the time, adult coloring books are a great way to calm and focus your mind. Implement anything that makes you feel better and more in control.

Meditation or Prayer

When I was going through this process I used a lot of spiritual tools – specifically mediation and prayer. I used these tools often throughout the day and any time I had to deal with a divorce issue or my soon-to-be-ex-spouse. It was one of the most important tools I had. In fact, several times when I should have been losing my mind these tools provided a peace that surpasses all understanding – I have no other way to explain it. Meditation can be as simple as turning your back to your computer at work and breathe deeply while concentrating on your breathing for just two minutes.

Plan Something Nice for Yourself

If your day is going from bad to worse, give yourself something to look forward to. Plan to do something luxurious and relaxing. You might take a long bath with the good bath oil, splurge on takeout for dinner, book a weekend away or set up dinner with a friend. I met with my Divorce Care group weekly on Tuesday nights and then dinner was always after. This was my weekly solace and something I never missed. I also met with my girlfriends weekly for lunch – just one of many coping tools for divorce I needed to help get through the process. Whatever it is for you, put it on the calendar and let nothing change those plans! You need to take care of you in order to better take care of those who rely on you.

Be Your Own Best Friend when Dealing with a Divorce

Take a moment to consider how you’re talking to yourself. Are you beating yourself up about your divorce? Everyone has bad days, you need nurturing, not beating up!

Do you believe the terrible things your former life partner is saying about you? I can relate to that. However, once I was on the other side of the divorce I realized very few of the accusations or ugly words he spoke to me were true. People say crazy things when they are scared and in divorce specifically. Don’t buy it!! More so, don’t reiterate it in your own head with your own voice. Getting an outside perspective from a friend or counselor can also be very comforting.

Gratitude and Celebrating the Wins

Sometimes it can feel like an achievement to get through the day at all when you’re dealing with a breakup. If you’re having a bad day, write down all of your wins, big and small. Focusing on the positive and being grateful can change your perception. If you took the time to eat lunch, went for a jog, had a family meal with your children, or walked the dog, you are on a winning streak! Make it fun and pat yourself on the back for all the checks on your list. I also created a gratitude journal. At the end of my divorce, I had more pages than I ever expected of things I was personally grateful for. I was stronger, I had survived and I was better for it, I was out of a loveless marriage, I was free to start over, I was healthy, and my most memorable – I had the entire closet to myself, etc.

Enlist Help

By embracing these coping tools for divorce you’ll find a happier, healthier you. If you are struggling with your finances as it relates to your divorce, though, we highly recommend calling in a professional. Contact Divorce Strategies Group today for help navigating one overwhelming part of divorce – your finances and your financial future.