The financial aspects of the divorce process are complicated and stressful – even more so if you are not well prepared heading into court.
There is a lot to lose in a proceeding that is rarely a win-win. Women who have not had to pay detailed attention to the finances in a marriage suddenly face a necessary crash course in Divorce Survival 101 with their attorney.
It can be scary and overwhelming, but it does not have to be! Breaking down, organizing and simplifying the big financial puzzle arms the client with the information needed to fight for everything to which she is entitled.
“The last thing some in a divorce want to deal with is finances and learning a financial language that is completely foreign to them,” Newman says. “But believe me, acquiring financial knowledge is important for you to successfully make it through your divorce and realize a positive future. If your ex made you feel like you were unable to understand money and you did not have to worry about it since he was the breadwinner, please know he was wrong. The money earned is your money, too.”
Here’s a bucket list – four financial buckets that are central to a divorce proceeding and help the client focus her strategy:
- Asset Distribution. You need to identify which assets can be divided between you and your spouse – i.e., which is considered marital property and thus subject to division; and which is separate property. The way assets are divided varies state to state. “The next step is valuing those assets, a process that may entail appraisers,” Newman says.
- Spousal support. This is usually referred to as alimony – the amount one spouse will pay to the other for financial support after the divorce. This happens when one spouse earns a significantly higher income than the other, necessitating the lower earner to receive enough money to maintain her lifestyle until she becomes self-supporting. Spousal support formulas vary state to state. “For spousal support, it’s very helpful for the client to fill out detailed forms showing expenses, liabilities, income and assets,” Newman says.
- Child support. Basic support includes food, clothing and shelter. The first determining factor is the child’s age: some states require support being paid until the child turns 18; other states say 21. “In most states, calculating child support uses a shared-income model, which is formulated on the child living the same lifestyle he or she would have enjoyed if the parents had stayed together,” Newman says.
- Extra expenses for the children. The fourth financial bucket includes the extras – health insurance, childcare, extracurricular expenses, education, etc. “You do not want to be in a situation where you are happy with your lump-sum monthly child support amounts, and then find out you have a ton of other expenses you must pay to third parties with those monies,” Newman says. “So you want to be very careful when negotiating these points.”
Jacqueline Newman, author of Soon To Be Ex: A Guide to Your Perfect Divorce & Relaunch, is the managing partner of Berkman Bottger Newman & Rodd, LLP, a New York divorce law firm.