Divorce: Financial Causes and Consequences
JUNE 26, 2020 | FAMILY
“Those who do not weep, do not see.” – Victor Hugo, Les Misérables
Stable marriages more frequently are the foundation of stable finances for both partners. Finance is the cause of countless divorces and financial counseling should be part of most successful couple’s marriage. Gambling, overspending, credit card debt, inadequate savings and improper job choices—or even the inability to spend for happiness–cause ruin to couples as well as individuals. Couples’ financial therapy is the most likely solution.
The divorce process takes a minimum of six months and frequently lasts over a year. A CFP usually advises only one of the partners in this situation to avoid conflict of interest. As a recent divorcee, I understand divorce law and strategy well enough to help draw up lists of assets and income for attorneys (at lower cost) and can help gauge the tax consequences of divorce settlements (or do split divorcee tax returns). It never hurts to have a financial advisor on your side along with an attorney responsible for actual bargaining and court procedures.
Financial challenges are likely to increase for most post-divorce and most people need thirty per cent more income to maintain their standard of living. One in three women lose their home post divorce and one in five fall below the poverty line. Children frequently do more poorly in school and lose after school opportunities. Men with low income suffer most but men with higher income may have wages or earnings garnished for alimony and child support.
At all levels of income and all three of these stages, sound life planning is helpful.