What are the most costly parts of a divorce?

It’s no secret that the divorce process can be expensive, but many people don’t realize that the process can be less expensive if you plan and prepare accordingly. Some of the costs associated with divorce are associated with hiring an attorney and dealing with the courts; other costs are related to the burden one half of a couple must take on when a secondary source of income is no longer contributing.

Couples who can work through the divorce process together might consider collaborative divorce, which can be a less expensive, and less contentious, way to secure a divorce. The alternative to collaborative divorce often includes litigation, which can be an extremely expensive and time-consuming process.

You might also consider hiring an attorney for a limited representation, which might mean that you and your soon-to-be ex fill out the forms on the state’s website and then each work with an attorney before submitting them to the court to double check your documents and make sure everything is accurate.

In addition to finding ways to minimize costs related to attorneys and courts, you should begin to plan as early as possible for the financial transition you will endure when you are on your own. One of the most important things you can do is establish a budget that includes all of your potential expenses so you’re aware of how much you will need to meet your needs. Here’s a good article on why budgeting is so important. 

How does divorce affect young children?

Parents who are going through divorce often want to protect their children from the emotional effects of the process, but what many don’t realize is that depending on how old the children are, the way to help kids through a divorce may vary.

For many young children, divorce may intensify a need for dependence, and for some it may also make them regress into behaviors that parents thought they had grown out of. According to this Psychology Today article, “For the young child, divorce shakes trust in dependency on parents who now behave in an extremely undependable way. They surgically divide the family unit into two different households between which the child must learn to transit back and forth, for a while creating unfamiliarity, instability, and insecurity, never being able to be with one parent without having to be apart from the other.”

The article, and other psychologists, suggest that one of the best things divorcing parents with young children can do is to establish regular routines and household activities. Young children need a sense of normalcy as much as possible, so parents are encouraged to be as reliable as possible in establishing visitation schedules and household routines. 

What is a premarital agreement?

Many of the couples who marry in this day and age will last a lifetime, but for some others, divorce is a much more probable outcome. While no couple plans on divorcing when they set out to marry, many couples decide before they marry that they want to plan for a range of outcomes, including divorce.

Most family law attorneys include premarital agreements as part of their practices. Premarital agreements, also referred to as ante-nuptial or prenuptial agreements, are contracts that the two halves of a couple enter into before they marry.

The content of these agreements is as varied as the couples who enter into them, but they can include a plan for what will happen to shared and individual assets should the couple divorce. Many attorneys and judges will use premarital agreements as a roadmap for dividing assets during the divorce process, but be aware that these agreements are not always fully enforced as written. It is up to the judge in a case to analyze and decide whether the agreement accurately reflects the situation between the parties when they divorce.

If you and your partner are considering a premarital agreement, it is important that you are each represented by an attorney. You must both also be as transparent as possible, which means that you’ll both have to share information on your assets during the process.

If you’re unsure whether you should have a premarital agreement with your partner, do some additional research and ask your attorney for more information. 

What should I do if marital assets emerge after the divorce?

The divorce process for many couples includes a deeply involved discussion about a couple’s finances and assets. That discussion aims to ensure that the couple’s assets are equitably divided so that both individuals can move on from the divorce on level financial footing. In some cases, one half of a couple may discover after the divorce is finalized that their former spouse hid assets from them and the court, which can be both a frustrating and alarming experience.

If you discover that your ex hid money or other assets from the court, you may have a handful of opportunities to ensure you get a share of them.

One of the first things you should do if you discover hidden assets is contact your attorney, who is trained to help you navigate the judicial process and will help you evaluate your options. He or she may advise you that it will be worthwhile to file a secondary lawsuit or a post-judgment motion for the judge to reconsider the divorce decree. If your ex deliberately hid the assets during the divorce process, he or she may be subject to punitive, or additional, damages.

Keep in mind that if you discover hidden assets, there may be time limits on bringing those assets to the attention of the court.  It is not advisable to wait long after discovering such assets to speak with an attorney, as by waiting you may be waiving certain options.

Regardless of why he or she hid assets, keep in mind that any reconsideration of your finances will still result in an equitable division, which does not necessarily mean equal division. Thus, it’s important for you to speak with an attorney to determine whether a lawsuit makes sense. 

Divorce during the tax season: some considerations

If you are in the process of securing a divorce during tax season, your yearly tax return can be extra stressful. Depending on your circumstances, it may make sense to still file jointly, but your attorney or a tax accountant can help you determine the best strategy.

There are pros and cons of filing a joint return even as you work through the divorce process, because in many cases, depending on your incomes, deductions and credits, your tax burden will be lower when you file jointly. However, one big consideration you should keep in mind is that both you and your-soon-to-be ex are jointly and severally liable for any payments, deficiencies, interest, or penalties for that joint filing. So filing jointly can still make sense for some couples.

If, however, you don’t want to file jointly, you may still file separately or as the “head of household.” The later is only applicable when a number of factors are present: your spouse did not live with you for the last six months; you can claim a dependent exemption; you paid more than half of the cost of maintaining the house; and the house was your main residence for more than half the year. If you’re uncertain if you meet any of these circumstances, discuss your situation with your attorney.

Regardless of where you are in the divorce process, you should discuss your tax situation with your attorney and a tax accountant before filing.

Divorce for small business owners: what to know

One of the most troubling things that can happen to a small business is the divorce of one of its founding partners, or in the case of a family business, the divorce of a company’s co-founders. If you’re a small business owner contemplating divorce, there are a handful of things you should consider before you begin the process.

1.      Be clear with yourself. Before you begin the process, ask yourself what you’re willing to sacrifice, what you aren’t willing to compromise on, and what costs you think your business can withstand. Also, as the process begins and wears on, be prepared to continually reevaluate the costs the divorce is taking on you and your business so that you can take appropriate action.

2.      Find the right attorney. Make sure, before you begin the divorce process, that your attorney understands what you want out of the situation and what you’re willing to sacrifice to get it. If you don’t have frank conversations with your attorney, you may end up spending unnecessary time and money on the divorce process, which can ultimately hurt your business.

3.      Use additional resources. Many small business owners surround themselves with a team of advisors — use them as you work through your divorce. Financial advisors, mentors, trusted associates, friends and family can all provide valuable insights during your divorce. Use them when you need to.

4.      Hire experts. In addition to utilizing your personal network and working with the right attorney, a business valuation expert can help you save time and money when it comes to evaluating the value of your business.

5.      Prepare for the lasting effects of the divorce. The process may take a year or more, but the long lasting effects, both financial and emotional, can take much longer, so be prepared to deal with the continued effects.

Here’s a useful article on the topic if you’d like to learn more.

What should I know about real estate during my divorce?

If you and your spouse are contemplating divorce, it’s important for you both to understand that when it comes to real estate, the process can be fraught with complicated questions and scenarios. Colorado is a marital property state, meaning that any joint property of the couple will be equitably divided during the divorce.  Equitable division is not necessarily equal division, as the court will consider the economic circumstances and the earning potential of both spouses when it makes the division.

When it comes to real estate, there are a few things to keep in mind as you work through your divorce, namely, understanding the value of what you’re dividing. After determining which property is marital property, the couple, or the court, will assign a monetary value to each item. If you need help determining values, you and your soon-to-be-ex should consider hiring professional appraisers.

Here are a few things to know about dealing with real estate appraisals:

1.      Most real estate values are based on comparable sales in your area.

2.      Every appraiser will have his or her own evaluation style, meaning there can sometimes be big differences in the values they provide (e.g., one appraiser may focus on the value of external landscaping, while another will focus on interior improvements).

3.      Real estate values can change drastically depending on the market, so the equity you have in a home may not directly translate to a profit if the real estate market isn’t strong.

4.      And don’t forget that an appraisal is only part of the story; to quantify your equity in the home, you’ll need to take the appraisal value and subtract any mortgages or liens that are on the home.

If you’d like to learn more, here’s an article from Forbes Magazine. You should also have a list of questions for your attorney as you navigate this process.