The Dark Side
Posted September 2012
The August, 2012 Financial Advisor Magazine included an article on planning for divorce. I thought some of the suggestions in this article might be helpful to someone either contemplating a split or in the initial stages of negotiations relevant to divorce. Just to make your day, this author reported that most of us have heard of the 50% divorce rate in first marriages; however, that rate jumps to 60-67% in second marriages and 70-73% in third marriages. I guess practice does not make perfect.
It used to be that divorce was a financial death sentence for the wife. The most recent U.S. census showed that 21% of recently divorced women live below the poverty line vs. 9% of men. The “times, they are a-changing”. There are new trends and new state laws that may cause the spouse with the greater income to bear the greater burden. Part of the payor’s burden may be paying legal fees for both parties and paying unrealistic child support and other expenses that the judge may not fully grasp. Even more threatening is the situation where the payor loses their job and still is obligated to pay amounts agreed upon in more prosperous times. Talk to your attorney. Just know that there are rarely any winners in a divorce. It would be unusual for one party to end up better if both sides are tugging at the same pot of dollars.
If the negotiations drag out, there can be more pain. Paying two house notes, two utility bills, and two car notes for an extended period of time can put a dent in any rainy day funds. Both spouses generally want to maintain no less than the prior lifestyle with the same income. The objective, therefore, should be an efficient and objective approach to the divorce process that will result in fair, equitable results that both parties can live with. A good starting point is engaging a knowledgeable attorney who is experienced in marital law, while realizing that there are areas in which he may not be an expert, such as the tax consequences of selling rental real estate. Also, how much of payments made to an ex-spouse are taxable? Are creditors involved? Are loan documents reworked after the divorce to remove one party or another from the loan so that an unexpected liability does not pop up in the future?
Be aware that divorces are not cheap. You will have attorney fees, appraisals, therapists and possibly mediators and arbitrators. In many cases, the main breadwinner will be responsible for these and other expenses for the duration of the negotiations. Once again, expediting the process will help reduce the overall cost. One important concession from the attorneys will be their litigation “budget”, which will give you an idea of what costs to expect with provisions for surprises. These “budgets” are generally not line item budgets, but expense projections based on a range of expenses. In all of this, try to remember that you once loved each other. Life is not always what we hoped, but you will probably have some sort of relationship with your ex-spouse for a very long time. It will be a better world if the two of you can “do unto others as you would have them do unto you”.
I participated in a three hour church service a few weeks ago. The gentleman next to me had the foresight to bring a cushion. What an event. All the bells and whistles available were present at this ceremony of installing a new bishop for our diocese. One of the hymns probably sums up the hope for the new bishop and his congregations: “God be in my head, and in my understanding. God be in my eyes, and in my looking. God be in my mouth, and in my speaking. God be in my heart and in my thinking. God be at mine end and at my departing”.
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