What obstacles should I expect during and after my divorce?

To most married people, just thinking about the concept of divorce can create fear of the unknown, apprehension about raising children and uncertainty about financial issues. There are only a few certainties in the process and most of them do not provide any comfort to either spouse: 

1. There will almost always be less disposable income in both households.
2. The children will be exposed to their parents in an adversarial and usually acrimonious atmosphere.
3. The process will be gut-wrenching, emotional, time consuming and expensive.
4. The outcome of the financial settlement will not be known for many months and sometimes even years.

If you have made the decision to go down this path, the way you approach the process with your spouse, your attorney and financial planner will make a difference in your mental readiness after the divorce decree is signed by the court. Fear is created and festered by a lack of planning. Approach the divorce as if it were dissolution of a business partnership, create a plan for your future and set reasonable expectations about the outcome. If you had a complicated business, you would hire the best legal, tax and financial advisors you could find to help you navigate the areas where you lack expertise. Approaching divorce in the same fashion makes sense. The decisions you make and the strategies you select at this point will have an impact on your life for many years.

Educate yourself about the property settlement laws in your state. Many states have different laws about how property will be divided—is it an “equal” state or an “equitable” state? Your attorney, CPA and financial planner should work together before the property settlement and spousal support are negotiated. A capable divorce financial planner should be able to help you understand your future expenses, understand the resources available to you, help you create a tax strategy for dividing assets and set goals that allow you to live within your new means.

Improper planning often leads to common mistakes such as not dividing assets in a tax efficient strategy, failing to provide to provide for the education needs of the children and short-changing one spouse at retirement. Although it can be difficult, it is important to separate the emotional issues from the “business” aspects of the process. The planning process begins with knowing what you have to work with and having an accurate assessment of your expenses. A good financial planner or accountant can assist with filling out the financial affidavits that will be required by your attorney.

In any divorce case, it is usually impossible for both parties to walk away and feel like they negotiated the best deal, usually both parties feel like they could have gotten more. From a financial perspective, neither party improves their circumstances after a divorce but with careful planning and by taking a collaborative approach, both parties can walk away with some degree of comfort about the future they can expect.

Cary B. Stamp is a CERTIFIED FINANCIAL PLANNER® and Certified Divorce Financial Analyst™.  He specializes in helping independent women make informed decisions and take charge of their financial lives. Mr. Stamp is a twenty year veteran of the financial industry and practices in Palm Beach Gardens, FL.