Women and Divorce, Read This First!
Source: rocket50
By: Ian Duncan Contributing rocket50 Writer
Date: March 22, 2023
“I helped my husband go to college. We are divorcing, can I get the tuition I paid back?”
Thinking about divorce? Read this first!
Every year in the US almost 2.8 million men and women go through a divorce. In the first year after the divorce is final, a wife’s standard of living may drop almost 27 percent. Compare that to her husband’s standard of living—it may increase by as much as 10 percent!
Many factors contribute to lowering the standard of living
Women generally end up with custody of the kids, and child support may not be enough to cover the actual cost of child rearing. For stay-at-home moms or those who held part-time jobs, getting back into the workforce and finding well-paying jobs is extremely difficult. It takes years to get on a career path to start making a good living. Divorce is expensive—there are court costs, therapist bills, getting established in new living situations based on a single paycheck. If you are contemplating divorce, now is the time to rethink your spending. Where can you cut back and start saving money that you’re going to need?
Talk to single moms, consult with a financial adviser
If you’re contemplating divorce, start doing some research. Talk to your friends who are single moms. Be fully aware of just how difficult it will be—especially if you don’t have family to help with the kids. Consult with a lawyer and a financial advisor. Make sure you’ve fully considered the impact of divorce on your kids, your spouse and your life. Think about timing.
Waiting 10 years can make a difference
There are several states in which there are special spousal support rules for marriages of 10 years or longer. If you earn less than your spouse, and you have been married for at least ten years, you have the right to be paid alimony for as long as it is needed and for as long as your spouse can pay. You and your spouse will decide on the right spousal support arrangement for you. If you waive support, the agreement cannot be modified in the future.
There are other reasons to wait ten years. The Social Security Administration also considers a marriage of ten years or longer to be a long-term marriage. This means that if you don’t remarry, you could be eligible for Social Security benefits based on your former spouse's earnings when you reach the age of retirement. If your spouse is in the military and has been on active duty for ten years or longer, you may also be eligible for retirement pay.
Make copies of all financial documents
Make a copy of all tax returns, loan applications, wills, trusts, financial statements, your mortgage, banking information, brokerage statements, loan documents, credit card statements, deeds to real property, car registration, insurance inventories, and insurance policies. If you have assets that you brought into the marriage, these will remain yours as long as you can document your ownership.
Be suspicious
Look for signs that your husband may be hiding income
Make sure you’re including any safe deposit boxes and reviewing pay stubs, retirement plans, and insurance policies. If your spouse’s business generates a lot of cash, find a forensic accountant to look for signs of additional income that he may be hiding. Don’t overlook hobbies or side businesses that generate income. Here’s an example: My neighbor Tom, crafts beautiful knives in his garage workshop that he sells for up to $1K/each. Working with iron and metal is his hobby, and when he sells something, there’s no record of it, and he doesn’t pay any taxes. But at $1K/each, he’s generating a nice little revenue stream. California is a community property state, and you’re entitled to half of this kind of income.
Did you help your husband get a degree or pay for grad school?
My accountant put her husband through law school, and he’s now a partner in a prestigious San Francisco law firm. When he wanted a divorce, she put her savvy CPA brain to work and received generous compensation for those years she worked to put him through school.
Consider big-picture tax consequences
Get an accountant to help you make the following decisions because they will have profound effects on your future and that of your children.
- Monthly alimony or a lump sum?
- What is his retirement plan worth?
- Should you keep the family home or sell it now?
- Who pays the mortgage until it sells?
Selling the family home is a difficult decision, but in too many cases, women hang on to the house because of the emotional bonds. They want their kids to stay in a neighborhood where they have friends and feel safe. But in too many cases, that home is too expensive to maintain. The constant upkeep, the landscaping and repairs, the mow and blow guy who comes once/week. All of this becomes a burden. Better to move to a smaller home in a neighborhood that’s more affordable.
Become your own advocate. Prepare for your future
Be informed. Taking an active role in the divorce negotiations will help you reach a better settlement. Consider mediation, couples often improve their communication through a mediation process. This will help a lot as you will need to raise your kids together.
If you stayed home to take care of your kids, you’ll need to find a way to support yourself and your children. Get career counseling and training. You may need to go back to school, so prepare for the expense of tuition and books. You’re creating a new life for your family. Stand up for yourself and get your share so you’re able to take care of yourself and your children financially.
Ian Duncan is our rocket50 legal contributor and the owner of Guideway.
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