Clients often ask, “Will I be OK?” This question has many layers – will my children be OK? Will my housing be secure? Psychologically, will I be OK? However, the question most often centers on financial insecurity from which many of the other concerns about being “OK” follow. How does one go from feelings of financial insecurity in divorce, to feeling more secure? Having financial security means among other things, having stable housing and being able to meet expenses, which ultimately contribute to healthy environments for children and adults, not just financially, but physically and psychologically.
Financial security in divorce is somewhat elusive – unless you have a lot of money, taking one household and dividing it in two with no additional financial resources, clearly has a financial effect. Yet clients should not panic, you can manage that effect both in the short and long term by educating yourself and by careful planning and consultations with the right professionals.
What does it mean to educate, plan and consult to minimize the financial impact of divorce and maximize the goal of financial security post-divorce?
- Gather copies of important financial documents – your attorney or other professionals with whom you work are going to ask you for financial information, so having that information to provide to professionals in an organized fashion creates efficiencies for the professionals and therefore less cost for you.
- See a reputable independent financial advisor or CPA who is familiar with and experienced with divorce. Too often, clients do not have a good understanding of their living expenses, including their budget at the time of divorce or how that budget might be different post-divorce. Clients may also lack full understanding of the family income, assets and liabilities. Getting a clear picture of the family finances with the help of an independent financial advisor or CPA can be critical to informed decision making. Financial advisors and CPAs can also run projections for you so that as part of divorce planning you can be thinking about things like saving for your children’s college education or retirement.
- If you are close to retirement, understand your retirement options at different ages so that your goals and financial security are aligned.
- If there is a business, what information will be necessary to determine its value, if any? Be prepared to provide that information timely and efficiently.
- See a career counselor if financial security may mean going back to work if you have been out of the work force, or exploring professions that might provide more income.
Learn About Your Options
- Explore the real estate market for housing, including the cost of homes, condominiums, and/or rentals in the area(s) where you would want to live. Consult a mortgage broker or real estate professional regarding options for staying in your current home, if you have to refinance to buy out the other party’s interest, or what type of mortgage you might qualify for if you were to purchase another home. You want to have sufficient information so that you can be realistic during divorce negotiations about what is feasible and what you can afford.
- In some circumstances, relocation is necessary and may involve changing school systems. Talk with a child psychologist to understand the impact of divorce on children and how to create a stable environment for them should relocation or change of school system be necessary. Research other school systems that might be acceptable, and are reasonable geographically, considering the potential parenting plan.
- Consult with an attorney who is knowledgeable about the different process options for divorce such as litigation, mediation and Collaborative Law, and their costs. Find out how each process option actually works. Determine what might be the best fit for you, and which process is likely to allow for negotiations that will be more likely to allow you to express your concerns about financial security and provide a positive environment for exploring how to reasonably meet those concerns.
- Have an open and flexible mind set! Nothing is perfect, all of your needs for financial security may not be met. It may be that the answer to “Will I be OK?” is not a total yes, but “OK enough.”
So, will you be OK? Take control and do not be in a place of panic or chaos when negotiating a settlement in divorce – analyze your resources and consult with the appropriate professionals as to what might make you OK enough now and help you plan to be OK enough in the future. As Michelle Obama has said, “Don’t be afraid. Be focused. Be determined. Be hopeful. Be empowered.” Education, planning and consulting help clients feel less overwhelmed, and better able to make decisions leading to better outcomes – and in control of their financial future.
To learn more about how settlement counsel, mediation, and Collaborative Law can benefit you, contact us.