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4 Simple Financial Rules you Should Know before Divorce

Anger and hurt tend to figure strongly in divorce, hand-in-hand with resentment, sadness, and fear about your future. And more often than not, these emotional woes all coalesce under the banner of money.

Based on National Survey of Family Growth (NSFG), conducted by U.S. National Center for Health Statistics (NCHS), the probability of a first marriage ending in separation or divorce within 5 years is 20 percent. After 10 years, the probability of a first marriage ending is 33 percent.

Anger and hurt tend to figure strongly in divorce, hand-in-hand with resentment, sadness, and fear about your future. And more often than not, these emotional woes all coalesce under the banner of money. That’s because divorce usually hits both parties’ wallets hard. This is one sad fact about money, but this is the reality.

Here are the key financial issues you should consider:

1. Try to Minimize your Legal Fees. If you and your soon-to-be ex are on friendly terms, you can save as much as 65 percent of the legal cost of splitting with a collaborative divorce. It is relatively new way to formally end marriage that emphasizes cooperation over confrontation. Collaborative divorce resolve disputes by removing the disputed matter from the litigious court room setting and treating the process as a way to "trouble shoot and problem solve" rather than to fight and win.

If you can’t come to an amicable agreement, try mediation before calling out the legal big guns or expensive divorce attorneys. Remember that when you communicate with your divorce attorney, the meter is running.

2. Choose between Alimony Payments or Child Support. Keep in mind that a way a divorce agreement is structured has major tax consequences for both parties. Payments classified as child support are not taxable to the payee spouse and not tax deductible by the payor spouse. Unlike child support, alimony is tax deductible for the person making the payments and considered taxable income for the receiver. As a result, divvying up the total is often contentious.

In theory, divorcing spouses may be able to save money in taxes by taking advantage of this difference, but you must be careful in how you should do this.

From my friend’s experience, if you choose to pay the alimony, do not rely on your divorce attorney to arrange your deductible alimony payments. Many divorce lawyers are woefully ignorant on this subject. Instead, you should hire a CPA or tax attorney to check out the proposed settlement.

3. Should you Stay or Go? Go to link to read more, Divorce

Marie Claire Cooper is a Certified Management Accountant. She grew-up in Brewster, New York, U.S. and now working in an investment firm in Singapore. Please read more about practical tips on personal finance management at her blog at PERSONAL FINANCE MANAGEMENT GUIDE

http://personal-finance-management.blogspot.com

Comments From Original Post:

Comments From old Wcx site where this was posted:

Run away fast
Don't get married. There is NO benefit for a man to get married. NONE. Unfair laws give women all the advantages in divorce. Men are a $ sign. Men can get everything they need by remaining unmarried. If you MUST get married, get a prenup and use a LAWYER. ALWAYS use a condom if you don't want a child. Imagine 216 monthly payments of child support when she says 'I can't get pregnant" or "I want to FEEL you". IF she's talking, she's probably lying. "i'm on the pill" means - I might get a prescription and I might take it. MEN - LEARN! Don't ruin your life because you were stupid.

Posted by bob on 30/12/2007 08:29:25

PRE-NUP: To do or not to do? WHICH IS THE ANSWER
A pre-nuptial agreement is an EXCELLENT idea but when young adults decided to marry, they are not usually concerned about their financial differences in their respective incomes. Many of these couples started a married life with few assets. Usually they expect each other to contribute to their best efforts to build a life together. Also, many people view a pre-nup agreement as unromantic. As if you don’t trust each other. Other say, they don’t do it because it gives the impression that you are already figuring out to get rid of him or her. Ah! There are so many pros and cons, it’s for an intelligent mind to decide what his or her priorities are. You can ponder on this: "My advice to you is get married: if you find a good wife you'll be happy; if not, you'll become a philosopher." -Socrates.

Posted by Marie Claire Cooper on 14/12/2007 19:39:54

PRE-NUP: To do or not to do? WHICH IS THE ANSWER
A pre-nuptial agreement is an EXCELLENT idea but when young adults decided to marry, they are not usually concerned about their financial differences in their respective incomes. Many of these couples started a married life with few assets. Usually they expect each other to contribute to their best efforts to build a life together. Also, many people view a pre-nup agreement as unromantic. As if you don’t trust each other. Other say, they don’t do it because it gives the impression that you are already figuring out to get rid of him or her. Ah! There are so many pros and cons, it’s for an intelligent mind to decide what his or her priorities are. You can ponder on this: "My advice to you is get married: if you find a good wife you'll be happy; if not, you'll become a philosopher." -Socrates.

Posted by Marie Claire Cooper on 14/12/2007 19:38:52

pre-nup
You marry without a pre-nup you get what you deserve. Women understand that marriage and divorce works in thier favor, men need to catch up. Divorce is the lottery for women and they know it. Best advice: air tight pre nup.

Posted by solorunner on 14/12/2007 14:39:05

Beware - Alimony Payments or Child Support
Child support was mistakenly entered (long story) as Alimony in my decree. A few years later the state's support enforcement office came after me claiming that I never paid child support and tried to collect 10,000.00. You might have agreement with your x-spouse but the state might say otherwise.

Posted by Fred on 14/12/2007 01:04:15

comments
You can modified fast mouse clickers who post more than one comment in the blog management settings.

Posted by Leo on 13/12/2007 23:31:09

Re: Don't Do It
@the X: You're mistaken. The truth of the matter is that you will potentially open yourself up to other legal problems. And in some states you get a common-law marriage that turns into other issues that were mentioned in this article. Don't lie to yourself by saying, "If we ignore it, it doesn't exist."

Posted by Randy Peterman on 13/12/2007 22:33:19

Why?
Why is everyone posting two or three times?

Posted by Me on 13/12/2007 22:13:59

Living Together
results in "Common Law Marriage" in many states. So, your advice is flawed. RE: Don't do it here's a simple solution: just don't get married in the first place. live together. then there's no mess with lawyers, no alimony, none of that crap. just "get the hell out" and you're done. Posted by The X on 13/12/2007 21:04:23

Posted by To "The X" on 13/12/2007 21:56:19

Living Together
results in "Common Law Marriage" in many states. So, your advice is flawed. RE: Don't do it here's a simple solution: just don't get married in the first place. live together. then there's no mess with lawyers, no alimony, none of that crap. just "get the hell out" and you're done. Posted by The X on 13/12/2007 21:04:23

Posted by To "The X" on 13/12/2007 21:55:35

Living Together
results in "Common Law Marriage" in many states. So, your advice is flawed. RE: Don't do it here's a simple solution: just don't get married in the first place. live together. then there's no mess with lawyers, no alimony, none of that crap. just "get the hell out" and you're done. Posted by The X on 13/12/2007 21:04:23

Posted by To "The X" on 13/12/2007 21:55:23

"Amicable" divorce
-is kind of like "functional" families- rare. I found out the hard way that the former spouse may flaunt the law and repeatedly violate the court order, and if they are female, the court does little, out of consideration for the children. The playing field is not level.

Posted by Robay on 13/12/2007 21:42:46

4 Simple Financial Rules you Should Know before Divorce
Those are some great tips for those women that have successfully suckered some poor sap into marriage. Nice work! As for me, I keep my freedom options open. thanks!

Posted by My Name on 13/12/2007 21:34:48

When routine bites hard
Love... love will tear us apart

Posted by Skooma on 13/12/2007 21:30:01

When routine bites hard
Love... love will tear us apart

Posted by Skooma on 13/12/2007 21:29:17

F Getting Married
Sounds like people who get married are incredibly stupid. Do they not realize what kind of contract that is???!

Posted by Marry Iage on 13/12/2007 21:22:15

F Getting Married
Sounds like people who get married are incredibly stupid. Do they not realize what kind of contract that is???!

Posted by Marry Iage on 13/12/2007 21:22:00

#2 of 4
In some states like Utah you cannot choose between alimony or child support. Alimony is dictated by the length of the marriage and there is a chart that determines child support based on how many children and your income.

Posted by Kevin on 13/12/2007 21:06:29

Don't do it
here's a simple solution: just don't get married in the first place. live together. then there's no mess with lawyers, no alimony, none of that crap. just "get the hell out" and you're done.

Posted by The X on 13/12/2007 21:04:35

Don't do it
here's a simple solution: just don't get married in the first place. live together. then there's no mess with lawyers, no alimony, none of that crap. just "get the hell out" and you're done.

Posted by The X on 13/12/2007 21:04:23

Pre nuptial
Hi Marie Claire, In your opinion would you recommend that couples sign a pre nuptial before getting married? would that solve some of these problems?

Posted by Paul on 13/12/2007 18:52:18