Happy New Year, Let’s Get a Divorce!

I am told that divorce filings peak at the beginning of the new year. Maybe people want to get through the holidays with families and then deal with the break up, but in any case- ’tis the season!

I got a divorce about 20 years ago. My husband (current husband? Second husband? Man to whom I am married?) got a divorce some time before that. My son is divorced. 40–50% of marriages in the US end in divorce. You may be reading this and feeling like you are the only one who’s marriage is falling apart- but you are in very good company. It is really an unfortunate reality — I am a huge fan of marriage- but this is the world in which we live. People get divorced.

I never thought I would be one of those people. When my first husband-to-be and I went for our pre-marriage counseling, our minister told us that rarely was he as confident that two people would have a successful marriage as he was with us. I really believed that. But for reasons that are now mostly distant memories, that was not the case — and the heart wrenching realities for the kids and for starting a new life- began.

Money and divorce are a complicated brew. A friend of mine who is a private banker (she thinks of herself as a financial psychologist) told me that a lot of her clients are wealthy older men. She has had more than one conversation that went something like:

Client: The kids are now gone, so now I am ready to get the divorce that I have wanted for years and marry my girlfriend. I want to understand what the implications are for my finances.

Banker: You will lose a fortune.

Client: Thanks- I guess the status quo will work just fine.

For most people however, apparently 50% of the population in fact, the expected cost of getting a divorce is not worth staying in a miserable marriage. When I was going through my divorce, my boss at the time (who had been twice divorced himself) said that “the cost of a divorce is the present value of your future misery” — the point being that you pay the huge cost in emotional anguish and often money upfront for a divorce, and from there life is all smooth sailing. While not exactly true, life will always have bumps, there is something to be said about ripping off a Band-Aid when it has to come off.

How to prepare your finances for a divorce? There are some divorcing couples that are incredibly amicable and able to make mutually agreeable decisions- at least I am told this is the case. I am also told that there is a reptile worth seeing in Loch Ness- but I haven’t seen that either. So, assuming you are in the rest of the population that actually has a fight on their hands when it comes to divorce and money, how best to prepare?

1) Always behave in a way that you would be proud to have your children, or your grandmother, see. While the temptation may exist to get down and dirty and hurt the other person, there is no amount of money that is worth trading in your integrity. You may have to bite your tongue and swallow your pride at times, but you will never regret acting with dignity.

2) Act based on facts. You have to know what all of your finances actually are — now is the time to channel your inner accountant. It is astounding how many couples have one spouse who handles everything financial. If you are reading this and are thinking “I don’t know what’s going on with my finances but that’s ok because we are never getting a divorce” — DANGER WILL ROBINSON!!- you are at risk of being very disadvantaged, because even if you never get a divorce, your spouse will unfortunately pass away one day, and you may be left to deal with all of this on your own in any case.

3) Have some access to liquidity. You don’t want to be in a situation where your ex-to-be takes all the cash and puts it in a separate account (likewise, don’t be that person!). But you do need to make sure that you can cover your bills and feed yourself.

4) Understand what the laws are in your state, and in particular around children if you have them. No matter how important it is to get an equitable split of finances, there is nothing more important than making sure your children are properly cared for. Making sure that the kids are financially and emotionally secure is critical.

5) Get support. Emotional support for you is critical at a time that is so stressful. I was lucky to have my mother living close to me when I was going through the darkest days of divorce, and having a shoulder to cry on, a warm meal, and someone who can take the kids for a fun day when I had nothing left to give, was a lifesaver. It also helped me to make better decisions- which is needed at a time when emotions can run wild.

Divorce lawyers are expensive but necessary. Financial advisors are traditionally also really expensive- and at a time when every penny counts, you need to prioritize. Using online tools, like Pefin- the world’s first AI financial advisor, to really understand your current and future financial situation can give you the answers you need at a difficult time. Being able to run through many different scenarios- what if you move to a new location? Get a new job? Change where the kids go to school? how does retirement change when you are no longer married?– it is important to fully analyze the implications for your life today and in the future.

I wish you all the best at what is often one of the most difficult times in a person’s life. It was for me. Although it is cliché to say that time heals all wounds, there is some truth to it. Making the best decisions you can today, however, can accelerate getting to the best possible place as quickly as you can. Here is to a bright new future!