6 Questions to Consider When Preparing for a Divorce

rsz 1financial pitfalls to avoid during divorce

Potential clients who are concerned with the financial aspects of divorce often ask similar questions.  Many potential clients are surprised to learn that there isn’t a specific formula that outlines how property and debt are divided or how spousal maintenance is calculated.  This naturally leads to more questions regarding the negotiation of money in their divorce case.  Since each potential client has a unique situation, it would be very difficult to provide a list of each question that you should be thinking about before filing for a divorce.  Below we have provided six practical questions you should be asking yourself and thinking about before you file for divorce.

1. Are you currently earning enough money each month?

Divorce creates additional expenses for both spouses.  When you separate from one household into two, you now have two of every expense.  Two rent or mortgage payments, two sets of utility bills, two health insurance policies, etc.  You’ll also lose the volume discounts you are receiving as a married couple such as the multi-car discount on your auto insurance or the family share plan for your mobile phones.  The same is true for your credit card debt.  If you used to carry credit card balances month-to-month even with two incomes, you need to think about how credit card debt is going to look when it is only your income.  Is the balance on your credit card each month from a one-time expense that was beyond your means or is the balance reflective of you needing credit to supplement your daily living expenses?  If it’s the one-time expense, you should be able to pay that debt off over time and move on without further consideration.  However, if you are using credit to supplement your two-spouse income, then you need to consider how you can pay for that debt moving forward after divorce as you will only have one income.  All these concerns need to be discussed with your attorney so s/he can discuss them with you and determine how monthly net income should be addressed.  The starting point for you should be an accurate Statement of Income and Expenses that you take the proper time to complete.  This will assist you and your attorney in discussing whether financial aspects of the case such as spousal maintenance, the division of property, and the division of debt.  Further, it will help you discuss how to best negotiate a settlement of you case without the need for a trial.

2. Do you want to stay in the marital home after the divorce?

Staying in the house for the stability of the children is an emotional decision all parents going through divorce consider.  In addition to having to pay the mortgage and utility bills, you need to consider your ability and desire to pay for house upkeep and maintenance.  Do you know what it costs to maintain the yard and landscaping?  Will you need to replace the roof?  Do you know how much it will cost to replace the driveway?  How old is your furnace, air conditioner, and water heater?  Do any of the kitchen appliances need to be replaced?  What about the flooring in the house?  So, even if you can afford to pay the monthly mortgage, you need to consider the cost of maintenance and if something goes wrong and needs to be replaced.  Additionally, you should consider whether the cost of staying in the home will affect your ability to pay for your children’s extracurricular activities or to save for retirement.

3. How stable is your employment?

This is a very difficult question for most people to consider.  If you are an employee at will, then you could be let go for any number of reasons without warning.  If you lose your job, do you have a safety net?  What about your spouse’s employment?  If you and your spouse need both of your incomes to meet your monthly expenses, you will want to consider the stability of your spouse’s employment as well.  You need to consider each spouse’s employment for child support, maintenance, division of debt, etc.  It is important that these questions are discussed with your attorney prior to the filing of the Petition for Dissolution of Marriage so you are informed and prepared for decisions that will need to be made during the case. 

4. What will my post-divorce lifestyle cost?

Whether it’s you or your spouse who pays the monthly bills, don’t get caught off guard with the cost of living.  If you have been living in the marital home for the past ten years and know it will need to be sold during the divorce, do you have any idea what a three-bedroom apartment might cost?  What about the utilities for that new apartment?  How about all the other expenses that you will incur each month to maintain the lifestyle you want to maintain after divorce? All these expenses add up and you need to know what it will cost.  Take some time before you file for divorce and research what your living expenses post-divorce might be.  This knowledge will serve you well and help you immensely when meeting with your attorney. 

5. How much will this divorce cost me?

This is the most common financial question asked by potential clients.  The answer is always dependent on how the divorce proceeds.  You and your attorney are only part of the equation in calculating what the divorce will cost.  The positions taken by your spouse and his/her attorney is another part of the equation.  Depending on the issues involved, there may also be a Guardian ad Litem appointed to represent the children’s best interests which will then become part of the equation.  Are you willing to go to mediation to try and resolve the case without the need for a trial?  What about having a meeting with the parties and the attorneys to try and resolve the case without the need for a trial.  What discovery is necessary for your case?  Is it all paper discovery or do you need oral depositions to obtain the information needed?  If no settlement can be reached, what will be the costs for a trial?  As you can see, how you and your spouse proceed with your divorce will ultimately determine what it will cost you and is a major financial consideration when preparing for divorce.

6. What are your family’s financial needs now and post-divorce?

When planning for divorce, you will complete a section of your Statement of Income and Expenses that sets forth monthly expenses for you and for your children.  That section should be completed as accurately as possible by taking averages over the past year.  However, this is only part of the equation.  It is useful for you to complete the same form for yourself using numbers post-divorce.  This will help you plan for your first-year post-divorce and understand your financial needs.  You also need to think about what your financial life may look like 3 or 5 or 10 years down the road depending on your age.  If you have young children, consider how their expenses will increase from age 5 to 10 to 15.  If you are over the age of 50, consider discussing income potential and retirement planning with your attorney when making financial decisions during divorce. 

Focusing on the financial considerations set forth above will not only help you with how to prepare for your divorce but will also help you make better choices during the process and hopefully increase your ability to secure your financial future.  Should you need the advice of an experienced divorce attorney or have questions or concerns about your situation, know that we are here to help and ready to discuss those issues with you.

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