In my last blog, I asked you to think about a question:
Am I willing to turn over a significant percentage of my net worth in order to be divorced?
Since you’re back to read more, I’m guessing you answered NO to that question and you’re ready to Avoid Financial Bedlam. Here are a few ways to keep more of your cash when you’re getting divorced.
Avoid litigation. In my last blog, I introduced you to Tim and Kathy. Even though they eventually reached settlement in their divorce, the path they took was pure litigation. Their attorneys wrote rough letters and held long blustery phone conferences where nothing much was accomplished other than defending their clients’ polarized positions. They filed motions and went to hearings, they argued over dishes and debts, they over-involved the children in their fights, and they both did so with the conviction that they were “right” and would have their “day in Court.” They didn’t sit down at the settlement table until they were over a year into the process. This is a sure path to Financial Bedlam.
Reduce conflict. Remember, Conflict = $$$. The more conflict your attorney can create, the more money he/she will earn. The more conflict you or your spouse create, the more money you will each pay to your attorneys to “resolve” your conflict. If you solve your own problems, like responsible adults should, then you will reduce conflict and save money. Make no mistake, even if it’s “the other side” causing the conflict, you’ll still be paying to put out the fires.
Create a budget. Tim and Kathy never budgeted their divorce. Tim, a business owner, budgeted every last detail of his business expenses. Kathy, who worked part time, managed the extra-curricular activities of three children, and never missed an employee’s birthday, was accustomed to managing the family budget and could do so without thinking twice. So why would these otherwise smart and capable people not spend time budgeting their divorce?
You might be saying right about now, “Are you nuts? We’re getting a divorce, not buying a vacation house.” Okay, but this is where the paradigm shift comes in. Let’s start off with some simple arithmetic. You and your spouse are going to be dividing one pie. The bigger the pie, the more each of you get. If you give half the pie to your attorneys, guess what? You’ll be splitting a lot less pie.
While it may seem strange at first, the cost of your divorce should be an obligation of the marital community (I’ll talk more about this in a later blog). It’s up to both of you to decide how much you are realistically going to have to spend to create a responsible, sustainable divorce agreement and then you will have taken the first step in Avoiding Financial Bedlam.
For example, if Tim and Kathy had thoughtfully considered the financial aspect of their divorce (apart from the legal, emotional, physical and spiritual aspects), they would have choked on the idea of depleting more than half their net worth in a two and a half year power struggle. With a total net worth of $300,000, they might have determined that a reasonable sum was 10% or $30,000. With $30,000 earmarked for divorce, both Tim and Kathy could have made some savvy choices from a variety of options, including an agreement to split any savings! They might have opted to do it themselves, participate in mediation, hire an arbitrator, engage in Collaborative Divorce, or a variety of other methods and, in each instance, could have advised the professionals in advance that they were seeking flat fee or capped fee services.
I’ll talk more about Avoiding Financial Bedlam in a future post. Until then …
Choose Peace! (It’s smarter.)