Money Issues After Divorce

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When one raises the issue of money problems after divorce, people either think of the hardship of starting over or they think of not having sufficient funds to pay child support or maintenance. But divorce does not end the need for former spouses to still consider purchases together so long as they have children and a legal duty of support.

A common problem spouses encounter after divorce involves a different lifestyle in the two households, often because one spouse has more disposable income. It can become challenging for the lesser earning spouse to feel unable to keep up with the spending of the other spouse on the children. Also, if the children become used to a certain level of comfort, the lesser earning spouse feels compelled to keep up or risks losing something in the relationship with the children – an unfair position for both the parent and the children.

Consequently, spouses should try and anticipate these issues and incorporate them into the settlement agreement and parenting plan where possible.

For instance, to limit the amount and cost of extracurricular activities, parents could include a provision in their agreement that says when a child wants to participate in an activity, if it costs more than a certain fixed amount, the parents must both agree to the activity and that both parents will stand together on the decision.

Another example: parents could agree that a child will not get a phone until a certain age, and when eligible, the child will receive a phone that will not exceed a certain sum in cost.

These issues become more complicated when dealing with gifts for birthdays or taking vacations, but if it is a sensitive area, parents could agree to put limits on the spending in their settlement agreement.

Some parents do not want to limit the spending to the detriment of the child but want to put most of the cost on the higher earning spouse. Some families will find this acceptable, but it does come with its own price in that it can leave the lesser earning spouse as the “poor parent” and that can impact relationships with the children. A parent should have the full respect of the children for paying to that parent’s ability, not made to feel less for making less (which is quite different from a parent who has the ability to pay but shirks responsibilities).

Laying this foundation early will help with the big ticket items that come later when the child nears driving age or going away to college.

For parents that do not communicate well, having these issues hammered out during the divorce and incorporated into the settlement agreement can avoid going back to court over these types of issues. For parents that can communicate, they should do so clearly and considerately as these issues arise.

If you have questions about money issues after divorce, contact us – we can help.

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