WAYS TO DIVORCE WITHOUT GOING BROKEBy Ginita Wall, CPA, CFP
with Jessica Richman
150 Ways to Divorce Without Going
This booklet is for sale in the WIFE.org bookstore: order
Divorce is the largest single financial transaction of most peopleís
lives, raising important questions that demand immediate answers.
This booklet contains helpful tips on every aspect of divorce, including:
before the divorce, gathering records, alimony, tax returns, navigating
the divorce, accumulating cash, hiring an attorney, child support, property
division, and life changes after divorce.
Before the Divorce
- Cancel all joint credit cards, including charge, department store,
and gasoline card accounts. Even if a court rules that you arenít
responsible for charges made by your spouse after you separate, the
credit card company can hold you responsible while you and your ex
sort it out.
- Before you separate, use joint funds to repair your automobile and
home, buy clothes for yourself and your children, and other family
expenses. Begin your divorce with these expenses already paid, rather
than arguing with your spouse about who should pay them later.
- Remember that judges usually enforce the status quo, so start the
processes now that you will want to continue after your divorce. For
example, go back to school, get braces for the kids, begin medical
- Open a post office box that you can use for your mail before you
separate and while you are in the process of divorce. Confidential
information can be sent to you there, and it provides a stable mailing
address as your life changes.
- Accumulate money in an easily accessible bank account in your name.
Although eventually you will have to tell your soon-to-be ex-spouse
about the funds, you will be able to use the money to get through
- Apply for credit cards in your own name. These cards have multiple
uses: as an easy way to access money during the divorce, to establish
credit in your own name, and to use when you cancel your joint accounts.
- If you need quick access to cash, borrow funds from your parents,
your 401(k), or a credit union. The cost of these sources of funds
beats credit card interest rates by a wide margin.
- Make a clear copy of all tax returns, loan applications, wills,
trusts, financial statements, banking information, loan documents,
credit card statements, deeds to real property, car registration,
insurance inventories, and all insurance policies. Copy all papers
having to do with money now, so you wonít have to subpoena them later.
- Donít delay gathering financial information, even if you are not
sure if you want to divorce. Knowledge about your finances will make
you a better partner if the two of you stay together, and will help
you get the best settlement possible if you donít.
- Copy records that you can use to trace your separate property, such
as an inheritance or a gift from your family. These assets will remain
yours as long as you can document them.
Hiring an Attorney
- Read a book or take a class on do-it-yourself divorce even if you
plan to use an attorney or mediator. Knowing how the legal process
works will mean that your attorney wonít have to explain it to youóat
his or her normal hourly rate.
- Try mediation instead of litigation. The litigation process creates
an environment in which two spouses fight against each other, instead
of working together to solve the problems of property division and
custody arrangements. Mediation is private, less expensive, and kinder
to your children than litigation.
- If mediation wonít work, consider arbitration. Arbitration is less
expensive than court, but lets you "rent a judge", an impartial
observer who may be able to help decide any issues remaining in your
Alimony and Child Support
- Do not waive your right to alimony except after close consideration
of all of the facts and a thorough discussion with your attorney.
Once waived, the right to alimony cannot be re-acquired.
- Consider receiving your alimony as a lump sum payment instead of
monthly checks. The default rate for monthly alimony payments is about
50%. A smaller lump sum that you actually receive is better than monthly
payments that never arrive.
- Fighting over child support in court is generally unnecessary. Most
states have legal guidelines based on income and child sharing arrangements
that do not allow for negotiation or tantrums. Ask your attorney to
compute support according to your local guidelines.
- When deciding whether or not to keep the house, consider the cost
of maintenance, repairs, homeownerís association fees, gardeners,
and other household expenses. Although you may be able to afford the
mortgage, the other expenses may exceed the amount your budget.
- Consider the value of professional degrees and licenses. In some
states, these assets are marital property, and you are entitled to
a share of their value.
- Donít forget often overlooked assets. Frequent flyer miles, vacation
and sick pay, season tickets, club memberships, timeshares, magazine
subscriptions, and prepaid insurance all are assets that have value
and should be split.
- If you allocate part of the retirement plans to the non-employee
spouse, use a QDRO (Qualified Domestic Relations Order, pronounced
"quadro"). A QDRO is a court order used to separate retirement
property (except IRAs) and should be prepared by a family law attorney
or a QDRO specialist.
Navigating the Divorce
- Find common ground and proceed from there. Even if you and your
soon-to-be-ex can agree only on minor points, thatís a starting place.
Document your understandings in writing, and build on your agreements,
rather than focusing on disagreements.
- Donít let guilt rule you. "Please release me, let me go"
goes the country song, but donít give up everything to buy your release.
Your spouse will still be unhappy, and youíll be equally unhappy when
you find yourself impoverished by your foolish gesture.
- Donít leave home until you have to. Once you move, you may have
trouble getting your personal items, and youíll also have difficulty
gaining custody of the children youíve left behind. And if you and
your spouse both want to keep the house, the resident spouse is more
likely to win.
- Donít let your spouse turn off the utilities and phone. If your
spouse moves out and asks the utility companies to cease billing him,
they may turn out the lights. Contact the utility companies to be
sure they will continue service in your name.
- Pay your attorney fees personally. While it is tempting to pay legal
fees from your business, donít. Most divorce costs are not tax deductible,
and paying the expenses from your business may make it possible for
your spouseís attorney to join the business in the lawsuit and scrutinize
its records in detail.
to Divorce Without Going Broke
This booklet is for sale in the WIFE.org bookstore: order
Ways to Divorce Without Going
Broke was written by Ginita
Wall, CPA, CFP