How to Win in Divorce

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In a recent post, I addressed the notion of “winning” at divorce. There are many lawyers who claim they can do just that, and they will be happy to take your hard-earned money while they fight your war for you. The reality is, in the vast majority of cases, you’ll wind up no better off than if you’d negotiated to begin with, and all the while you’re funding your lawyer’s kids’ college education instead of your own. 

Winning might instead be viewed as getting through this divorce transition with integrity, keeping more of your own money, and maintaining your and your children’s emotional health throughout. Ideally, you’ll do this without ever stepping foot into a courthouse or even speaking to an attorney. 

So, how do you get better outcomes, at a lower cost and without judges, courts, or even lawyers? If you have minor children and marital assets, don’t attempt a do-it-yourself divorce unless you want to risk costly mistakes that cannot later be reversed. If you want an easy, affordable, and legal solution, seek a qualified divorce mediator. 

You will want to find a mediator who has the knowledge, skills, and experience to guide you and your spouse to a financially optimized settlement agreement and, if applicable, with a parenting plan that preserves the integrity of your family. A mediator with the divorce financial expertise of a Certified Divorce Financial Analyst (CDFA®) is ideal.

How, though, to address the legal piece of your divorce? You will find that legal agreements and divorce papers are straightforward in a mediated case. These can be easily facilitated by your mediator so that you never even have to work directly with an attorney to process your divorce. (It’s never a bad idea, though, to have an attorney review your agreements before they are finalized, and this can be done at a minimal cost.)

Rationally approaching your divorce, along with a dose of grace, can result in a lower-cost and faster process while addressing your financial needs and preserving your family’s emotional well-being. Now, wouldn’t you agree this would be a “win” at divorce?

What it Means to “Win” at Divorce

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Are you contemplating divorce or in the early stages of divorce and determined to get or keep as much as you can, leaving your spouse with as little as possible? If so, you’ll easily find a divorce attorney who will fight your war with you for years. And you’ll only end up where you would have if you’d negotiated to begin with. And guess what—you’ve funded your lawyer’s kids’ college accounts rather than your own. Is this a “win” at divorce?

Perhaps you should instead consider getting through this overwhelmingly difficult transition with dignity while keeping a lot more of your own money and maintaining your and your children’s emotional health throughout. In most instances, you can do that without ever stepping foot into a courthouse or even speaking to an attorney. 

The fact is that ninety percent of divorces don’t belong in the court system. When you involve the court, you give up total control around life-altering decisions regarding your assets, your income, and the custody of your children. Whether within or outside of court, if you involve an attorney for both you and your spouse—the traditional model—it will result in legal expenses that you can’t possibly fathom when you’re 1) just getting started and 2) convinced the “system” will see your side of what’s just. Attorney-driven divorce processes will not provide you with practical guidance and needed emotional support nor correctly value all your assets and considers both the short and long-term impact on each spouse’s financial health.

I set out years ago to find a better way to divorce, creating and refining a process to deliver just that. At TruNorth Divorce, we provide a legally-sound, one-stop solution for divorcing couples who want a financially optimized settlement that helps both spouses achieve their long-term goals. When children are involved, we also provide effective and durable parenting plans. Yes, there is indeed a better way that will be less expensive, faster, less stressful, minimize the negative impact on your children, and launch you towards a new and promising future.

Want to know more? Read How to Win in Divorce.

Checklist for Getting Your Best Divorce Settlement

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Knowing that you got your best divorce settlement means you’ve considered a lot of things that aren’t necessarily on an attorney’s radar or within the realm of his capabilities. There are many mistakes that can be made. Here’s a list of items that you should include when putting together your divorce settlement agreement. A CDFA® divorce financial planner or mediator is your best resource for ensuring you and your spouse are agreeing on a settlement that is fair and strategically planned for an optimal outcome.

 

ITEM WHY IT’S IMPORTANT CONSIDERATIONS
Proper identification of marital and separate property You split marital assets but keep your own separate property. It’s not always clear about what constitutes marital property. Co-mingling of funds, growth on real estate and owned businesses may have an impact on the amount to be divided. A Certified Divorce Financial Analyst (CDFA) can conduct a separate property tracing to determine what is marital and what is separate.
Assessment of tax implications No all assets are treated the same with respect to taxes. Trading assets of equal value but different tax treatments can have a huge impact on long-term financial health. What are the applicable tax classifications for retirement funds vs. real estate vs. stock options, etc.?
Consideration for both short- and long-term financial implications Alimony, child support, and how you split assets can result in substantial differences in long-term financial health even when the short-term needs are met and the division of assets looks fair. It’s important that you look at the impact of the divorce on near-term as well as future financial health. A CDFA can provide financial projections for both spouses before they agree on a particular settlement.
Provision for allowing spouse to remain in marital home under adverse financial circumstances Sometimes one spouse wants to continue to live in the marital home but can’t re-finance it on their own. Maybe, too, the house is “under water” and can only be sold as a short sale or foreclosed. Additionally, there are capital gains tax exclusions considerations to consider when transferring ownership to one spouse. There are some clever ways of handling the marital home to allow one spouse to continue living in the property for a period of time without the other losing out.
Accurate valuation and division of pensions Many misunderstand what figures to use for division of a pension. Pensions are subject to a coverture fraction, accurate identification of payout amounts, cost-of-living increases, and the appropriate discount rate.
Streamlining of asset division Simplify administrative and legal follow-up Sometimes it’s better to leave a pension, other retirement account, or business owned whole and aligned with just one of the spouses. Other assets or structured notes can be used to avoid selling assets or dealing with Qualified Domestic Relations Orders (QDRO’s).
Treatment of employee bonuses and other non-cash benefits Executives and business owners may receive a large portion of their compensation in the form of bonuses, stock, car allowances, and other benefits that don’t readily show up as income or assets. It’s important to thoroughly review employee agreements for executives and accounting records for business owners.
Proper accounting of stock options and restricted stock units (RSU’s) Employee stock options earned while married are a marital asset whether or not paid before separation or divorce. Determining the marital portion, vesting, and valuation of stock options and RSU’s is complicated and best left to financial specialists.
Option for alimony buyout Nobody likes alimony. Alimony payments are painful to the obligor and uncertain to the obligee. Why not just determine the present value of the future payments and include it in the division of assets?
Accurate identification of separation date The separation date can have substantial impact on valuation of assets. Is it the date the divorce complaint is filed, the spouses started living in separate bedrooms, or something else? What if there is a temporary reconciliation?
Optimizing filing status and deductions The difference between filing single vs. head of household can make a big difference in tax payments. Under shared custody arrangements, child exemptions can be rotated to allow both parents to file as head of household.
Protection of future alimony and child support with life insurance If a buyout isn’t possible, the oblige should have protection is something happens to the obligor. Obtain insurance protection that you know won’t be cancelled.
Inclusion of a detailed parenting plan Even if you and  spouse fundamentally agree on custody and how to raise the children, there may come a time when circumstances change or there is a difference of opinion. Parenting plans that address a wide array of issues should be included in a property settlement agreement to protect the children and both parents.
Impact on future college financial aid for the children Custody decisions and child support can have implications for college financial aid. One should consider how settlement decisions might affect future financial aid to pay for college expenses. 529 plans should be managed so they have minimal impact on financial aid awards.
Assurance that all assets have been accounted for Are there any suspicions that one spouse has been “preparing” for the divorce and diverting assets? Consider the use of a forensics specialist to examine financial records for hidden assets.
Accurate business valuations There are a variety of ways to value businesses in divorce, some more expensive and time-consuming than others. Make sure you have an accurate valuation of businesses owned before settlement options are reviewed.
Timing of divorce on Social Security Timing of divorce can impact future social security payments. You may want to delay your divorce to optimize future social security.
Identify follow-up tasks to ensure compliance It’s not time to rest when the property settlement has been filed and the final divorce decree is received. Follow-up is essential to obtaining and protecting rights to assets. Insurance, QDRO’s, quit-claim deeds, beneficiaries, and more need to be handled after a divorce. Make sure you get a comprehensive list of what still needs to be done once your divorce is final.

 

 

 

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Are You Going to Be a Winner or Loser In Your Divorce?

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My experience as a child of divorce had a profound and lasting impact on me. I was ten then and if I wasn’t already hard-wired to become the strong woman that I am today, dealing with my parents’ divorce would have made me one. It affected my choices in men, need for accomplishment and independence and, ultimately, it lead me to a career of championing winners in divorce.

My father was liberated in his newly-single life: he dated frequently and widely, learned to cook, grew his business into one of the most celebrated in its industry at the time, frequently took his boat out for a spin on the Chesapeake, and was even being cited as one of our city’s most eligible bachelors in Baltimore Magazine.

My mother, meanwhile, was so devastated by her divorce that she attempted suicide after the birth of my sister, with whom she was four months pregnant when my father announced he was leaving. Just 33 years old, my mom was attractive, smart, sweet, and capable, but she never recovered and died much too early of a disease that, I’m convinced, was brought on by a broken heart never mended and the inability to embrace life after her marriage ended. If ever there was a dichotomy between winners and losers in a divorce, my parents’ was a notable example.

There are winners and losers in divorce. At least that’s what the late Judith Wallerstein told us in her seminal book on the longer-term impact of divorce, Second Chances: Men, Women, and Children a Decade After Divorce. While such a dichotomy is now considered more a spectrum, I have spent much time since reading her book considering the question of what makes someone a winner or a loser in divorce.

So, what makes someone a winner in divorce? It’s really simple: being a winner in divorce is about deciding to be one. Do you choose to wallow in misery, cry the blues, dedicate your life to getting even, fold because you never want to be so hurt or vulnerable again? Or do you pick yourself up, stand tall and make an affirmative choice to create the best life you are now able? Winners accept the reality of the divorce, including the necessary changes to the most important elements of their lives—their relationship with their children, their home, career, financial status, and friends. Is it easy? Hell no! You are going to have to work really hard, persevere, be willing to accept setbacks, and most of all, get help—because it’s going to be hard to make good choices when you’re feeling so overwhelmed.

What kind of help are you going to need? If you and your spouse can tolerate each other and want an amicable divorce, start with a divorce mediator, preferably one with specific divorce financial training (a CDFA®). If your circumstances rule out mediation and you instead go the litigation route with lawyers, consider first working with a divorce coach.  You may be thinking “who can afford an entire divorce team when I can barely afford a lawyer?” A divorce coach can, in fact, often help save you money by assisting you in working more efficiently with your lawyer and communicating more effectively with your (ex-) spouse to bring about quicker resolution—all the while at a lower hourly rate than your lawyer’s! A CDFA® may, too, help put more money in your pocket by avoiding costly and irreparable mistakes and getting you a better settlement than you might with a lawyer alone.

Even if you don’t have it in you to make the choice to be a Winner for yourself right now, do it for your children. Kids, no matter their age, need two strong parents, not one winner and one loser. The research strongly supports that children can only win in divorce when their parents are both stable and able to largely focus on their children’s needs. Conflict and despair take precious energy that could otherwise be spent on being a good parent to your children.

Being a winner in divorce starts with making the choice to get through your divorce with courage, emotional maturity, and integrity and, eventually, to thrive again in your un-coupled life. Your divorce team, and especially a trained divorce coach, is critical in doing so. I so wish my mom had chosen to be a winner—it would have made all the difference in her life. And mine.