Part 1: Navigating Divorce with a Solutions-Based Mindset
April 18, 2022 •Scott Logan, CFP®, Wealth Manager
Whether amicable or not, and regardless of who wanted the marriage to end, divorce is hard. I’m speaking from personal experience. It’s hard on each other emotionally, spiritually, and financially. And of course, it’s most difficult on children.
This two-part series will mostly cover the financial elements of this transition. Part one will cover preparation for divorce. Part 2 will list steps needed to be taken after the divorce is final.
This series will set the tone for a cost effective and relatively peaceful process, for both spouses and their children.
- Start with an agreement to use a solutions-based approach
It is in both of your best interests to move forward with a solutions-based mindset. A solutions-based approach will help you redirect your conversations when emotions are high. Creating an agreement up front to focus on solutions first will help set the tone and manage emotions. Create some rules of engagement for all conversations. For example:
- Treat each other with respect
- Remember the past love and investment made into the union
- Refrain from using social media to punish the other or gain support
- Agree to seek outside counsel (legal, therapy, financial) if you get stuck
Allowing emotions versus solutions to guide your decisions can be financially expensive and emotionally fatiguing for all involved.
- Make the decision to be informed and involved
The end of a relationship will involve inevitable stress, but it’s important to decide up front to tackle issues even if you’re not fluent in the topic. The subject of money is stressful to many people, and divorce all too often exacerbates this internal tension. Stress may stem from not understanding investments, a sense of feeling overwhelmed by the many facets of life that are influenced by money, maybe feeling like you’re behind, or in this instance like you’re not getting a fair shake.
Regardless of why money may be a hard topic for you, it’s important to face it head on because you won’t be able to negotiate properly or fairly without a sense of your personal finances.
- Get organized
You will make many irrevocable decisions during the divorce process, and the more organized you are the higher quality your decisions and negotiations will be. Taking steps to get organized may be painstaking, especially if you haven’t been involved in the financial aspects of your relationship, but the result will benefit you and your children for years to come.
It’s important to realize and acknowledge that the “household” expenses are increasing, so depending on your overall financial picture and income, your lifestyle may change. There will now be two mortgage or rent payments, double utilities, loss of group insurance discounts, etc.
Write out the estimated costs of running your “new” home, and gather documentation of all accounts (checking, savings, pensions, IRA’s, 401k’s, etc.), recent pay stubs, debt balances for credit cards/autos/real estate, and at least two years’ worth of tax returns. Being able to see the entire picture in one organized format will be empowering for you, and ultimately lead to ownership and good decision making.
- Lean on trusted professionals
Not all legal settlement options are right for everyone, not all attorneys who practice family law have equal experience, and not all laws across states are congruent.
In some states, division of marital assets and child support calculations are straightforward from a legal perspective which means both parties can have a clear path to agreement if operating with transparency and a solutions-based mindset.
Alimony, however, can be trickier as some courts and judges make more subjective decisions based on argument and sometimes even their own personal experience or world view.
The best-case scenario involves both parties operating from a “what is the best solution for all of us?” mentality and ironing out a fair agreement to present to a knowledgeable divorce attorney for a final decree and child custody plan. It may even be helpful to enlist a knowledgeable Certified Financial Planner™ who understands the emotional and financial nuance of divorce to look at various assets from an after-tax perspective before you send a final asset division plan to the attorney.
In the event both spouses are working together in the spirit of a solutions-based mindset and fairness but can’t see eye to eye on an issue or two, mediation may be a good option. A mediator is hired by both parties, so there isn’t bias towards one spouse or the other. A good mediator who understands marital law and the local legal system has a good chance of bringing two reasonable parties together for an equitable solution.
Ideally, choosing the path of litigation should be the choice of last resort. Litigation is stressful. It prevents each spouse from beginning the healing process in earnest because finality of the marriage hasn’t been achieved. It takes a long time to navigate through the legal system. Litigation can be incredibly expensive. You lose control over your own situation. Most judges don’t really care about the emotions the parties may be feeling.
Most judges do, however, care about the well-being of children so if the safety of kids is at risk, court may be necessary. But as it relates to finances (marital division of assets and debt, alimony, child support), the judicial system focuses primarily on rendering a just decision based on the facts.
Use other resources for support too. Therapy or counseling can provide a safe place to vent, heal, grow, and move forward with your new chapter.
- Stay focused on the big picture
Regardless which path you take, stay focused and consider the impact in every area of your life: there is some cost (both financial and psychological) to fighting for what you legally deserve, and what you want but don’t really need or deserve. There is so much at stake, so don’t get bogged down fighting over small things or trying to “make things right”. Most often, bickering over the small things just makes matters worse for all involved, and doesn’t keep you focused on solutions for the whole family unit. When you have a commitment to a solutions-based mindset and approach, you have an opportunity with each interaction to shape a better process and outcome for all involved.
Lastly, surround yourself with people who will encourage you throughout the process to choose wisdom over “winning”, solutions over strife and stress, and peace over power.
Nobody wins in divorce, but if you (even if your spouse doesn’t) focus on your own personal healing, your children and the future, you will have a much better chance of moving forward with dignity, grace, and more financial security.
You got this!
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INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.