How Do You Protect Your Stuff In a Divorce?
By “stuff,” I mean property as well as:
You Want a Secure Financial Future
John sat across from me, and he was fighting back tears. He paused. He took a drink of water.
Then, he said, "We're both really concerned about our financial future. It's been hard enough while we've been together. I don't want to lose everything we've built because of this divorce. I'm almost 60; it's not easy to start over."
John was right to be concerned. Divorces can be costly, and you can easily sacrifice your financial future during litigation. It happens in the blink of an eye.
For many families it is difficult enough to financially maintain one household. After a divorce you now have to maintain two. You have to consider your long-term financial needs when making decisions during the divorce.
In court, the Judge is not going to act as your financial advisor, meaning the he/she is not going to decide how to maximize your income and your assets so you both benefit. The judge is just going to figure out what is “marital property” and what isn’t, then divide it up in a way that seems fair.
You may not get the stuff you want or even the stuff you can afford to keep.
There is usually a better way to protect and divide your “stuff,” where both parties feel there has been a fair division and you feel you have a good springboard for your future.
Consider These Things As You Assess Your Financial Needs
Educate Yourself
In most relationships, one spouse took care of the family finances and the other person didn’t really pay attention. It’s an intimidating time for the person who is less familiar with the family finances.
Save yourself future problems and headaches by gathering financial documents immediately. Your bank account statements, retirement account statements, mortgages, and all other financial documents are most likely relevant to your divorce. Review all of your financial documents, and make a list of everything you own, and everything you owe.
Make sure your attorney points you to the available resources that are best for your situation, including books, classes, therapists, and financial advisors. Some financial advisors have achieved the designation of Certified Divorce Financial Analyst (CDFA) and are familiar with all of the financial issues related to divorce.
Develop a Strategy to Maximize the Property and Income You Have at the End of the Divorce
Many families enter the post-marriage state with debt and assets that cost more money than they can afford. A financial strategy is critical.
Securing your assets at the beginning of your divorce is an important first step. I go into this more in depth as the fifth step in 5.5 Things To Do Before You Divorce.
Understand the values of your property, but also understand the costs of owning that property and any income-earning potential from that property. People get emotionally attached to things they own. They fight over keeping those things, and they really have no idea whether they can afford them.
A year before her divorce, Beth's husband bought her a Lexus SUV. Early on in the divorce, Beth recognized she wasn't going to be comfortable making the monthly payment for the Lexus, and that the Lexus ate up too much gas. She decided to trade it in for something that made more economical sense for her once she was on her own.
Carefully review every expense you have or expect to have, then reduce those expenses as much as you can. This includes the cost of owning property you will be receiving in the divorce. What makes the most economical sense for you?
Consider also how you are going to obtain additional income:
Health Insurance
Most families have a family health insurance policy. When the marriage ends, so does the policy for one of the spouses.
The spouse who is losing insurance coverage needs to check on the costs of getting a new policy and for COBRA (temporary extension of current coverage).
You need to know what you’re going to do for health insurance before the divorce is final, and you need to know the costs so you can work it into your budget and support request.
Housing
One spouse may want to keep the marital home, especially if children are involved and there’s a desire to keep the children in the family home. If you are the spouse who wants to stay in the family home, take a hard financial look at the carrying costs for the home:
After factoring in the costs of the current mortgage or refinancing, taxes, insurance and other fees, as well as your future income, you may decide that purchasing a less expensive home, or renting, puts you in a more comfortable financial position.
Many divorcing spouses get bogged down in the emotional desire to keep the family home, and they get way under water trying to finance it all. The end result is, after spending a lot of time and money on attorney’s fees to keep the home, they wind up losing it within a couple of years. Don’t make that type of financial mistake.
Child Support
There is a straightforward formula to determine the child support amount in Florida. You can calculate your estimated child support amount at the Florida Courts website.
Alimony
Florida does not have a straightforward formula to calculate alimony. There is a lot of uncertainty whether a Judge would order alimony in your case, the amount of alimony the Judge would order, and the duration of the alimony. If possible, it is usually better to come to an agreement to avoid the uncertainty once all financial information has been gathered.
- your available income,
- your insurance (life and health),
- your home,
- your bank accounts,
- your investments, and
- the property inside your home.
You Want a Secure Financial Future
John sat across from me, and he was fighting back tears. He paused. He took a drink of water.
Then, he said, "We're both really concerned about our financial future. It's been hard enough while we've been together. I don't want to lose everything we've built because of this divorce. I'm almost 60; it's not easy to start over."
John was right to be concerned. Divorces can be costly, and you can easily sacrifice your financial future during litigation. It happens in the blink of an eye.
For many families it is difficult enough to financially maintain one household. After a divorce you now have to maintain two. You have to consider your long-term financial needs when making decisions during the divorce.
In court, the Judge is not going to act as your financial advisor, meaning the he/she is not going to decide how to maximize your income and your assets so you both benefit. The judge is just going to figure out what is “marital property” and what isn’t, then divide it up in a way that seems fair.
You may not get the stuff you want or even the stuff you can afford to keep.
There is usually a better way to protect and divide your “stuff,” where both parties feel there has been a fair division and you feel you have a good springboard for your future.
Consider These Things As You Assess Your Financial Needs
Educate Yourself
In most relationships, one spouse took care of the family finances and the other person didn’t really pay attention. It’s an intimidating time for the person who is less familiar with the family finances.
Save yourself future problems and headaches by gathering financial documents immediately. Your bank account statements, retirement account statements, mortgages, and all other financial documents are most likely relevant to your divorce. Review all of your financial documents, and make a list of everything you own, and everything you owe.
Make sure your attorney points you to the available resources that are best for your situation, including books, classes, therapists, and financial advisors. Some financial advisors have achieved the designation of Certified Divorce Financial Analyst (CDFA) and are familiar with all of the financial issues related to divorce.
Develop a Strategy to Maximize the Property and Income You Have at the End of the Divorce
Many families enter the post-marriage state with debt and assets that cost more money than they can afford. A financial strategy is critical.
Securing your assets at the beginning of your divorce is an important first step. I go into this more in depth as the fifth step in 5.5 Things To Do Before You Divorce.
Understand the values of your property, but also understand the costs of owning that property and any income-earning potential from that property. People get emotionally attached to things they own. They fight over keeping those things, and they really have no idea whether they can afford them.
A year before her divorce, Beth's husband bought her a Lexus SUV. Early on in the divorce, Beth recognized she wasn't going to be comfortable making the monthly payment for the Lexus, and that the Lexus ate up too much gas. She decided to trade it in for something that made more economical sense for her once she was on her own.
Carefully review every expense you have or expect to have, then reduce those expenses as much as you can. This includes the cost of owning property you will be receiving in the divorce. What makes the most economical sense for you?
Consider also how you are going to obtain additional income:
- Will you be receiving child support?
- How strong is your need for alimony (spousal support)?
- Do you need to consider getting a job for the first time in a long time?
- Do you need to get a higher paying job?
- What is your game plan for increasing your wages?
Health Insurance
Most families have a family health insurance policy. When the marriage ends, so does the policy for one of the spouses.
The spouse who is losing insurance coverage needs to check on the costs of getting a new policy and for COBRA (temporary extension of current coverage).
You need to know what you’re going to do for health insurance before the divorce is final, and you need to know the costs so you can work it into your budget and support request.
Housing
One spouse may want to keep the marital home, especially if children are involved and there’s a desire to keep the children in the family home. If you are the spouse who wants to stay in the family home, take a hard financial look at the carrying costs for the home:
- Can you afford it on your own? In most cases, you’ll have to pay the mortgage, property taxes, homeowner’s insurance, and association fees.
- Do you have to buy out your spouse? Can you qualify for refinancing?
- Are there major repairs that will need to be done soon?
After factoring in the costs of the current mortgage or refinancing, taxes, insurance and other fees, as well as your future income, you may decide that purchasing a less expensive home, or renting, puts you in a more comfortable financial position.
Many divorcing spouses get bogged down in the emotional desire to keep the family home, and they get way under water trying to finance it all. The end result is, after spending a lot of time and money on attorney’s fees to keep the home, they wind up losing it within a couple of years. Don’t make that type of financial mistake.
Child Support
There is a straightforward formula to determine the child support amount in Florida. You can calculate your estimated child support amount at the Florida Courts website.
Alimony
Florida does not have a straightforward formula to calculate alimony. There is a lot of uncertainty whether a Judge would order alimony in your case, the amount of alimony the Judge would order, and the duration of the alimony. If possible, it is usually better to come to an agreement to avoid the uncertainty once all financial information has been gathered.