Divorce Articles Section
Money Matters in Divorce
by Carol Ann Wilson, CFDP (Certified Financial
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.