Like many things in life, a do-it-yourself approach often costs you more money—and considerably more time—than hiring an experienced professional in the first place. Divorcing couples may think they’ve resolved 90% of their issues, only to find out that the “holes” in their informal agreement put one of them at a distinct disadvantage.
Sometimes clients tell me they want me to act in a limited role. They will settle some aspects of their divorce alone. That’s fine, provided they understand the issues. When they settle without understanding the ramifications of their actions, it can end up costing them money—sometimes lots of it. Below are a few examples.
Example 1. Swapping the house for the pension. People have many emotions attached to their house and to their pensions. Many people, as discussed in other blog articles REALLY want to keep their homes. It’s usually an emotional decision. Many working spouses feel they have earned their pensions. Their attachment to the pensions is also very emotional. The temptation to let each spouse keep what their emotions are telling them to keep is great. However, is it an even trade? Usually not. Pensions are a lifetime stream of income. Some come with other benefits attached, such as health insurance. They can be worth over $1,000,000. If your house has a million dollars in equity, then it’s a fair trade. If your home equity is less, then you have been short changed.
The best thing to do is confer with your lawyer. She can help you value each asset and make a legal and practical decision that may include each of you getting most of what you want. Once you know the practical implications, your emotions may cause you to reassess your attachment.
Example 2. When you oppose the divorce, you agree to your souse’s demands in order to show him/her what a reasonable/generous person you are. In other words, how can you divorce such a jewel? This rarely works. The spouse who wants the divorce will usually take advantage of your generosity, but still divorce you.
The best thing to do is share this strategy with your lawyer. In my practice I discourage trying to buy your spouse’s favor. The decision to divorce is usually made over many years. Your giving up what is legally yours will not change their decision to divorce. If they don’t respect you for standing up for yourself, the marriage isn’t going to last. Once you realize that you can’t encourage them to stay married by being generous, and you decide that you will insist on receiving all you have coming, they will become really mad. This will make post divorce communications more difficult.
Example 3. You agree to allow your spouse to keep the marital home and you find other living accommodations without determining whether your spouse can qualify to refinance the marital home. Subsequently, your spouse is turned down for the refinance and you have to sell the home, which you can no longer afford to keep because you have made other commitments. You have just incurred unnecessary transactional expenses (realtor commissions, costs of sale, moving expenses) because you didn’t require your spouse to demonstrate that he/she could afford to keep the home. Also, if you could have qualified to refinance, you missed an opportunity to keep the house for yourself.
Confer with your lawyer about your options and the necessary steps that you should follow to determine whether your spouse is really eligible to refinance. Your lawyer probably knows of local mortgage bankers who will work with divorcing spouses who need to refinance. The rules do differ between banks. Your lawyer can facilitate your spouse and you covering all the necessary steps and save you significant money.
Example 4. The initiating spouse insists that you work out the divorce without lawyers. He suggests that he will be really mad if you hire a lawyer to represent you. You don’t want the divorce and you still hope he’ll change his mind about staying married if you comply with his wishes.
At least confer with a lawyer and find out what you may be giving up. Also engage a therapist who will help you assess whether your marriage can be saved. I recently represented a client who had the courage to hire me and risk the spouse’s ire. The client was entitled to and did receive over $600,000 more than the spouse wanted to pay to settle the divorce. In the end, he had a girlfriend and had no intention of continuing the marriage.
Example 5. You think alimony is no longer being awarded. You have been married to a spouse who earns significantly more than you, though you have a well-paying job. You agree to waive alimony or spousal support. Alimony or spousal support is still being awarded in many states. Whether you qualify depends on the facts of your family situation. Confer with an attorney to determine whether you qualify.
Most people divorce only once and don’t have the benefit of experience when they go through the process. Plain and simple, what you don’t know— and do-overs—are more costly than you might imagine.