Keys to Surviving Divorce

Posted on October 28, 2014

by Margie Connolly

Margaret McCullough Connolly, Sugar Land Attorney and Counselor at Law

Going through a divorce can be a difficult time. Here are some tips to help you get the best result possible while maintaining your sanity.

1.    Complete a thorough inventory of your assets and your needs

  1. Taking accurate inventory of your assets and their most current valuations is crucial in achieving a favorable outcome. Knowledge is power when negotiating the finances of your divorce. The inventory should include every asset you own from the cars to the retirement accounts to future pensions and social security payouts at a future age for you and your spouse. You should also make copies of all tax returns over the past 3 years. These returns can help explain a lot more than your income and taxes paid; they can help find potentially hidden assets, dividends, capital gains, depreciation, and business expenses.

          2.  Get your emotions out with your support group – not your lawyer

The more emotional you are, the more costly your divorce could be. If you spend hours (or minutes) talking to your lawyer as if he/she was a therapist – the more costly your divorce will be and the less likely you are to be taken seriously. Think about your divorce as a business negotiation. You are hurt and angry, yes, but you are also negotiating your financial future. Vent outside the lawyer’s office so you can enter negotiations with a business mindset.

      3.  Settle out of court if at all possible.

      You may be forced to go to mediation before court. This is an excellent opportunity to curb costs and prevent a very lengthy, expensive war. Prior to mediation, know what you really want to keep, what you are willing to give up and then be prepared to spend the day giving and taking. In mediation, the divorcing parties have 100% control over how things will be settled, assuming they can come to an agreement. If your case goes beyond initial mediation, the costs could skyrocket. Do not let your pride and emotions hurt you financially by holding out on one or two issues that may seem paramount at the time. Consider this – can what I want to keep be replaced with a new version of the item with the money I’ll save by ending this now?

             4.  Ask for help.

        Divorce is expensive.  Maintaining a household as a single parent is obviously more expensive than a 2 income household. It’s okay to ask for help during this time of transition. Rely on friends and family for the extra support someone going through this process needs. This will help you keep your emotions out of the courtroom, the attorney’s office and out of your personal business dealings. It’s easy to let your emotions take over and talk about your divorce to anyone who will listen. This is not always wise. Use your friends and family during this time. If you do not have a network of friends or family close by, your local church may have a divorce recovery or divorce care group which can be very helpful.

      5.  Don’t forget your spouse’s employer benefits and plans

It’s important to know what your spouse is entitled to as you negotiate your financial future. Contact the Human Resources Department at your spouse’s employer and ask about any and all benefits. As a spouse, you are entitled to know about current and future benefits; be sure to ask if there’s a pension plan in place. Review your last two or three tax returns, which will list any interest earnings, dividends, or capital gains that were reported. By comparing the financial affidavit to the tax return, you can reconcile assets and look for omission.

       6.  Consider taking a one time, penalty-free 401k distribution during divorce.

Many people don’t realize each spouse, no matter what age, can take a one time, penalty-free distribution out of a spouses 401k during the divorce process. You must take this distribution directly from the 401k – it’s not available from IRA’s without the 10% penalty. For example, if you want money to put down on a new home, you can take a one-time lump-sum distribution from your soon to be ex-spouses 401k penalty-free to do this.

Beware of emotional attachment to your marital home.  The marital home and the retirement plans are likely to be the largest assets in your marriage. Many people – especially women – have such an emotional attachment to the marital home that they cannot imagine life in another house. However, the house comes with a mortgage, taxes, maintenance and repair bills.  A pension does not. It’s important to consider the type of assets you are getting rather than just achieving a 50/50 split.

        7.  Identify and focus on what’s really important

We all have a finite amount of financial and emotional capital. It’s wise to spend yours in areas that are really important to you. By clearly articulating your needs and goals, you will expend less time, money, and emotional capital over the small stuff. Clarify the issues that are most important to you and focus only there.

           8. Avoid the gray areas & look down the road.

Gray areas in your divorce decree can lead to conflict in the future. This conflict hurts everyone – especially children. Plan for your children’s contingencies today to avoid conflict in the future. Who will pay for college? Who will buy the car when the kids can drive? Who will pay for insurance? How many extra-curricular activities will your child/children be involved in, and who will pay for these activities? Look at holidays – do you want to add Halloween or Easter to the holiday rotation? Is there a large family event annually which you want to establish rights to? Consider all your life events, and establish guidelines for possession of the children for those events as clearly as possible today to avoid conflict in the future.