Divorce Advice Articles Section

Money Matters in Divorce

by Carol Ann Wilson, CFDP (Certified Financial Divorce Practitioner)

Divorce isn't something that happens to "other people" anymore. In fact, there are about 1.4 million divorces every year in the United States.

Given the fact that divorce can and does happen, the solution is often not to prevent divorce but to help the process and the settlement be as equitable and as painless as possible.

THE WIFE'S POINT OF VIEW

The higher the income of the family, the wider the financial gap between divorced partners. The reason? Most couples still invest in the husband's career while the wife's job takes second place.

The courts often ignore this crucial issue when dividing marital property. Most lawyers and judges try to provide equitable divorce settlements for both parties. However, without a comprehensive financial analysis, many wives end up in dire financial straits despite legislation designed to provide fair divorce settlements. A number of factors can contribute to an imbalance in a divorce settlement; however, one fundamental fact prevails: a traditional married couple's lifestyle is usually based on the husband's income.

THE HUSBAND'S POINT OF VIEW

Men have several very real concerns. The number one concern for fathers with young children is how the divorce will affect their relationship with their children. Even though we hear about fathers who abandon their children after divorce, this is not the prevailing attitude. During divorce, men fight for the right to participate in the lives of their children. Only if denied that right do they sometimes walk away in frustration and discontinue child support payments. Just because a man and woman no longer get along with each other does not mean that a father loves his children less.

After the issue of children, a man's second concern is the prospect of paying life-time alimony to his ex-wife. Men want an end to the payments. They believe they cannot get on with their own lives as long as they have to pay alimony to an Ex. They really don't understand why they should have an obligation to support this person indefinitely.

Having to pay out large sums in the first few years after a divorce for things like child support, alimony, attorney's fees (both his and hers), as well as property settlement, means that a man's discretionary income may suffer greatly. He frequently feels that he has been "taken to the cleaners" and that he is doomed to pay for the divorce forever. In some cases, he may be right. But statistics show that in most cases, the financial effects of divorce are relatively short-lived. Men can take solace in the fact that their earning potential is almost always higher than the ex-wife's and they will eventually be financially better off than she will be.

A third critical concern to men is sharing their pensions. A man feels he earned the pension and he should not have to share it with anyone. It's interesting that, in many cases, the man will agree to a 50/50 property split and give the wife other assets in exchange for keeping his pension-- "just don't touch my pension!" It becomes an extremely emotional issue that can steer a man in the wrong direction!

IS AN EQUITABLE DIVORCE SETTLEMENT POSSIBLE?

Can something be done to lessen the negative impact of divorce? Are equitable settlements really possible? Yes.

However, few judges and attorneys are financial experts. Financial analysis of the outcome of possible settlements is complex and requires substantial experience. When legal expertise is not matched with sophisticated financial projections, an apparently equal division of property can leave the lower- or non-earning spouse destitute within a few years.

Contrary to popular belief, arranging a settlement that benefits the lower-earning spouse does not necessarily harm the higher-earning spouse. In addition, the standard of living may not be dramatically affected for either spouse.

Although it is impossible to predict the future, sophisticated software can be used to forecast the eventual financial outcome of specific divorce settlements. The program can be used to test different scenarios, such as higher or longer-lasting maintenance, disproportionate property division, and reduced standards of living.

With available software, professionals who are familiar with putting together equitable financial settlements can help couples avoid the court battle and a more humane result can be accomplished.