Couples getting divorced generally focus their attention on splitting assets, alimony, child support, custody issues and getting through the process as quickly as possible. However, many fail to consider the actual cost of getting divorced.
Understanding the many factors that can cause the cost of your divorce to skyrocket is an important financial consideration.
Some of these factors include:
Is the divorce being litigated, mediated or is it a collaborative divorce?
Educate yourself about the different divorce processes and decide which one is best for your family.
Litigation is often times the default process because many people think they have to hire attorneys and go through the court system. Unfortunately, litigation may be the most expensive divorce process due to the time it takes, court availability, court filings, inefficient communications between parties, and lack of control over the process. These factors contribute to the length and cost of the process and can stretch out for years.
If you are able to work cooperatively, Mediation or Collaborative Divorce may provide more control over the process, allowing you to better manage your costs and settlement agreement.
Complexity of your financial situation
If you own a business or have ownership in stock options, hedge funds, pensions, limited liability partnerships, etc., discovery, valuations, and transferability issues all add cost and time. Professionals with specific expertise may be needed to value a business or pension plan, appraise properties or other assets and are often overlooked when budgeting for divorce.
The more organized you are in gathering and organizing your financial information the better able you are to control costs. Whatever, divorce process you choose, they all require you to submit accurate and complete financial statements. If you are unable or unwilling to pull this information together, you will end up paying your attorney or financial specialist to do so for you.
Emotional stress is part of every divorce. Unfortunately, it can be destructive and nonproductive if emotions boil over and result in one party walking away or disengaging from the process. Dwelling on past hurts or focusing on the "principle" of an issue may cost money and delayed resolution.
Clear and open communications with your mediator, attorney, divorce financial planner and/or coach, will help you to manage through these emotional periods and stay focused on the outcome. All questions should be considered and strongly held positions should be discussed, negotiations should be kept fluid and open, exploring all options so both parties can find common ground and move towards resolution. The additional time to resolve hard line positions and inability to negotiate can be costly.
Withdrawing from the Process
Making changes to your professional team or changing from one divorce process to another can be expensive. Often times your new team will have to duplicate work that has already been done. Unfortunately, you will fully bear the costs of these changes and they can be considerable.
Divorce is hard, emotional and expensive. Determining which divorce process makes the most sense for your family, making a commitment to that process and sticking with it even when there are difficult times is the first step in controlling costs. Talking to professionals about realistic budgeting is helpful, but actual costs are determined by the time necessary to organize, appraise, value, negotiate and litigate. Having the right team to help the process keep moving forward may in the long-run be the best way to control costs. These professionals may include attorneys, a mediator, a financial specialist and a coach. You should realistically review your situation and determine how much you can afford to spend on the process, where you need help and where you don’t. Planning for costs upfront, taking responsibility for organizing financial data, building the appropriate team of professionals and staying engaged in the process will help better manage the expense of getting divorce.
This article is for informational purposes. All situations are different and this article does not have regard to the specific planning objectives, financial situation and the particular needs of any specific person who may view this article.
Lincoln Financial Advisors does not provide Divorce Planning.
Jessie L. Foster is a registered representative of Lincoln Financial Advisors Corp.
Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (Member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. 125 Summer Street, Suite 1400, Boston, MA 02110, 617-728-7436. CRN-780663-121213
Jessie L. Foster