Will it be war?
Before you move forward with divorce, the savviest attorneys would advise you to make some preparations. It might seem heartless, but if you plan to ask your spouse for a divorce, or if you think your spouse might want one from you, there are some matters you should take care of first. Attend to these issues before you or your partner decide to call it quits, and you'll be ahead of the game during legal negotiations.
We know that the notion of a pending divorce—even one not yet discussed with your spouse—can send you into a tailspin. The mere thought of divorce might evoke a range of emotions, including relief, fear, disappointment, excitement, and dread. After years of frustration, you're finally ready to divest yourself of some old and uncomfortable life choices for a world of new possibilities and, you hope, lower levels of conflict and pain. But no matter what you feel, you must push these emotions aside and take some practical and highly strategic steps before anyone gets the ball rolling.
1. Consider Your Legal Options
Until you have embarked upon the journey of divorce yourself, you might have some unrealistic notions about what is involved. Ideas about the painful process derive not just from family and friends but also Hollywood movies and tabloids that focus, often, on extraordinary circumstances or the extraordinarily rich and famous. When you read about divorce in the newspaper, the principals are enduring pop icons like Donald and Ivana Trump—not Mary and Tom from down the street. Movie divorce is typified by the classic drama-cum-comedy-cum-nightmare, The War of the Roses, the 1980s farce about Barbara and Oliver Rose, the perfect, wealthy couple with all the accoutrements, from the spectacular house to designer cars and clothes to the real art. Neither wants to part with all the luxuries, so when divorce becomes inevitable, they and their attorneys fight to the death—literally. The Roses end up dead on the floor of their magnificent home after a final battle royale atop the crystal chandelier. Although most protagonists like these manage to come out alive, divorce for the wealthy and well-to-do has always been a high stakes game involving costly attorneys, each negotiating (and sometimes litigating) for a client's part of the marriage “pie.” For the richest Americans, much about divorce remains the same.
For many years, middle-class divorce was a less-costly version of the battles waged by the rich, with each party hiring an attorney—albeit a less illustrious one—who negotiated for assets and other rights on the client's behalf. But in the twenty-first century, that has changed. Most middle-class divorces today are conducted through a variety of venues, often veering significantly from the lawyered-up model of the past. Indeed, over the past couple of decades, according to the American Bar Association, the process of divorce has undergone radical changes in the United States.
For one thing, large numbers of middle-income Americans hire attorneys for just part of the process and increasingly handle paperwork and logistics themselves. Many others opt for low-conflict resolutions. This includes not just mediation, in which a neutral third party—the mediator—helps the parties reach a compromise, but also the newer method of “collaborative divorce.” In collaborative divorce, each party has an attorney, but the adversarial milieu is replaced by a philosophy of harmony and the goal of getting along. In collaborative divorce, the two attorneys work together as a team, with the goal of problem-solving, not duking it out.
The well-to-do may always divorce the traditional way. They simply have too much at stake to do it any other way; given all their assets, the process must be technical and involved if everyone's interests are to be served.
But for the middle-income couple, the options have widened. From the do-it-yourself divorce (referred to as pro se or pro per) to the mediated divorce to all the variations in-between, divorce has become a consumer's marketplace. If you have limited funds, you no longer have to spend them all on your attorney just to sever your marriage. On the other hand, extra choice means extra risk and responsibility. Should you stop at a storefront and offer your credit card for a $99 divorce, leaving the details to an attorney (or more likely, a paralegal)? One thing is certain: You should educate yourself so you can make sure you are fully protected. As you begin to investigate divorce logistics, stay alert and remain skeptical. The choices you make now could impact your financial and familial situation for years or even decades, so make sure you are doing things right.
2. Consult and Hire an Attorney
As soon as you think you will be seeking a divorce, you must speak with an attorney. This is the first step in your journey, and an essential one. Even if you have been married for only a short time, even if you have no property or children, and even if you plan to mediate your divorce or handle it all yourself, you still need to take this step. An initial consultation with a divorce lawyer can be free, but even if it costs you a couple of hundred dollars, it's better not to be penny wise and pound foolish.
You may think your situation is so simple, or your assets so negligible, that you have nothing to worry about, and nothing to lose except for the attorney fee. But you could be wrong. From lingering debt to funds in a pension or retirement plan, there are many assets and liabilities even the most modest couple is sure to have. You may make fatal errors before you have a chance to tell your spouse what's on your mind. Should you move to another apartment now? Might you lose your chance at custody of the children? Can you date? Should you take money out of your bank account? In short, are you at risk in any way?
A qualified divorce attorney will help you avoid traps you could never know about on your own. (Don't rely on advice from your divorced friend—every case is different.) During the meeting, the lawyer will ask you questions that will allow him or her to evaluate your case. Building on this knowledge and knowing the law and the court system, the lawyer will be able to answer your questions and offer appropriate strategies. Whether you end up hiring this lawyer or not, you will gain a better strategic sense of what's ahead.
Although the wealthiest individuals often pay their full-service attorneys hefty re-tainers to start work, those of more modest means may now purchase legal services à la carte through a new style of practice called “unbundled” law. In this method, an attorney will look over your shoulder if you can't afford “full service,” and no retainer may be necessary. He or she can help you strategize, write a legal letter, or review a mediated settlement agreement. Should you decide to handle many of the details and do the bulk of the work yourself, it is nevertheless in your best interest to have an attorney on tap who is familiar with your case. Even if you and your spouse have “worked everything out” or have chosen a mediator, your own lawyer will advise you about rights you probably don't know you have. You don't need a Marvin Mitchelson or a Raul Feldman, but you should find someone who has handled divorces before, someone you can afford, and someone with whom you feel comfortable. You are going to have to live with your divorce settlement for the rest of your life. Make sure you don't sell yourself short. More about this later on.
How do you find an attorney? Word of mouth is usually a good way to begin, but don't go by recommendations alone. Other resources are your local Bar Association, or if you are really strapped for cash, you can try legal aid. Don't settle for the first attorney you meet. You must find someone you like, and that individual must practice the kind of law that meets your needs. If you want someone to offer services by menu, then a full-service powerhouse may not be for you. Meet with a few lawyers before making up your mind. Even if you have to pay for these consultations, you'll learn a little about the differences in legal style and hone in on the qualities you prefer.
3. Know Your Spouse's Annual Income
One of the first issues you'll be settling in your divorce agreement or in court relates to money. Whether for spousal support or child support, you will have to know your spouse's earnings and assets to calculate a reasonable figure. If it doesn't make sense to ask your spouse, you might have to do some digging before that information becomes unavailable.
If your spouse has a salaried position or is paid by the hour, the information should be on a recent pay stub. Alternatively, look at last year's tax return. If your spouse is self-employed, a tax return might not tell you the full story. Do a little detective work. Be creative, but be careful not to break state or federal privacy rules. Perhaps you can enlist the help of another person. Does your spouse have a business partner? Are you friendly with the partner's spouse? He or she might know about the business and be willing to share what he or she knows over a friendly lunch. Is someone else in the partnership divorced? Make an ally of that partner's former spouse, who will probably be full of information from his or her divorce and only too eager to share it.
Ultimately, you might have to rely on your spouse to furnish this information, but it's prudent to know as much financial information as possible before taking it up with him or her. One wife we know happened to be enrolled in a course on money management when she decided to move ahead with her divorce. Before she informed her husband, she asked him to help her fill out an income-disclosure form—ostensibly her “homework.” When she began divorce proceedings, she had the information she needed—in her husband's handwriting, no less. Even if you're not enrolled in a class, requesting such information should be fairly straightforward. Why do you want the details? In this day and age, our financial status is something we must all be on top of. Just tell your partner you feel foolish without a handle on the economic underpinnings of your life.
4. Realistically Assess What You Can Earn
Depending on the circumstances of your matter, you might have to go to work after the divorce. Have you been out of the job market for a while? Perhaps you need some time to get your skills up to speed before taking the plunge. Or, better yet, get a plan to make yourself more marketable and ask your spouse to support you while you go to school or get that extra training. Has business been off lately? Keep a record of that now so no one later accuses you of deliberately reducing your income to negotiate a more favorable settlement.
5. Learn About Your Family's Financial Holdings
Remember, as you wind your way through the divorce maze, you will only be able to share in assets you know about, so you must find out exactly what the two of you have. For most, that's probably easy. There's a house (with a mortgage), a car (maybe leased or encumbered by a loan), a pension or retirement plan (not yet vested), and a little bit of savings. But for some, property ownership is more complicated. For instance, businesses created during the marriage are assets to be valued, and a judge can distribute their value upon divorce. The same may go for an academic degree or even part of the value of a summer house—one you inherited during the marriage, depending upon the facts of your case.
6. Realistically Assess Your Family's Debt
Often, the allocation of debt is harder to prove or negotiate than the division of assets. What debts do you have? Credit card, personal loans, bank loans, car loans? How much does it cost to pay these debts each month?
As for tabulation of assets, a good source for this information is your family's tax return. Specifically, search under Schedule B for sources of interest income and jot down the information. If possible, locate the 1099 forms—the forms that banks use to report interest income each year. That form will have the name of the bank and the account number. If you don't have the tax return and are afraid of raising suspicions by asking for it, write the Internal Revenue Service. The IRS will provide you with a copy of the return (provided it was a joint return), but it takes several weeks to receive it. If you have a family accountant, you can also ask him or her to send you copies of returns and 1099 statements.
7. Make Photocopies of All Family Financial Records
Canceled checks, bank statements, tax returns, life insurance policies—if it's there, copy it. You might never need this information, but if you do, it's good to have it.
8. Take Stock of Your Family's Valuables
Inventory your safety deposit box or family safe, and take photographs of the contents. Do the same with jewelry or any furniture, paintings, or other items of value. You needn't list every worn-out piece of furniture, but anything with a value of more than $300 should be included. Property-insurance policies can be helpful here because many companies ask you to list the valuables you want insured. Some people keep a list of belongings in a safe, also for insurance purposes. If you've done that, start with that list. There's no need to reinvent the wheel.
What stocks, checking accounts, and savings accounts do either of you have? Do you have a stockbroker? What about life insurance and health insurance? Get detailed information on every policy you own, jointly or individually. Get the name and phone number of your insurance broker now.