Six Tips for Separating Emotions from Economics in Divorce

Financial Infidelity and The Money Trap

by Ginita Wall, CPA, CFP®, CDFA 

They say that a bad marriage is like a game of cards. You start out with two hearts and a diamond – but end up wishing for a club and a spade. When those feelings surface during a divorce, it leads to unproductive conflict and often results in a less than optimal settlement.

In divorce it is important to focus on the real problems to come up with real solutions. If spouses are at war, they are likely to see each other as the problem and the divorce as the solution. But they won’t get to true resolution until they recognize that simply isn’t true. The real problem is how to divvy everything up in divorce, and divorcing spouses won’t arrive at the best solution for their family until they collaborate on resolving their issues by working together, not against each other.

No matter how much spouses despise each other, they often equally despise spending money on a divorce battle, so even though they are on the outs they may be willing to work together to settle matters and keep the costs down by staying out of court.

When you are going through a contentious divorce, the key is to avoid letting uncertainty whip either of you into an emotional tizzy. The more frenzied your emotions, the longer the proceedings and the more costly the divorce. Collaborative divorce can be a Godsend in reaching optimal resolution at a reasonable cost.  In collaborative divorce, you’ll have all the professionals at the same table, working with the same facts, and engage coaches to keep everyone on track. That keeps uncertainty and miscommunication down, which helps everyone focus on the issues that are most important.

The job of the professionals in collaborative divorce is to help clients figure out how to divvy up the assets and debts so that each spouse emerges from divorce with a fair share of the pot that will let them begin anew. Here are six tips the divorcing spouses can use to separate emotions from economics:

Don’t let guilt rule you. “Please release me, let me go,” pleads the country song, but don’t give up everything to buy your freedom. Your spouse will still be unhappy that the marriage is ending, and you’ll be unhappy when you find yourself impoverished by your foolish gesture. The needs of each person are important, and the goal is to reach the best agreement possible as you balance those needs.

Don’t give in just to get it over.  When going through divorce, carefully consider your current needs and your needs in the future. You can’t depend on your soon-to-be-ex have your best interests in mind, and you can’t depend on your attorney to know exactly what is best for you and your family. Don’t try to shortcut a divorce. The only way out is through, and it will take your conscious involvement to reach a resolution that will work for you.

Don’t make nice to get him or her back. It’s all right to hope against hope that your divorce will end in reconciliation, but don’t bend over backward to make it happen. Stand up for yourself and get your share. If you successfully reconcile, and some couples do, that’s wonderful, but if you don’t, you’ll still be able to take care of yourself financially.

Leave revenge at the door. Legally, it doesn’t matter who did who wrong. Revenge is costly, and funding a wild rampage by not giving an inch is bound to turn out badly. You won’t win every battle, no matter what, and if you stubbornly stick to your guns despite all reasonable offers to settle, who knows, you might even end up paying part of your spouse’s attorney fees.

Don’t succumb to threats, or threaten your spouse. Money and power are emotionally linked, but in divorce it isn’t smart to try to use money to control your spouse and get your way. If you launch a full-blown court battle and argue every financial issue, be assured that most of what you can’t agree on will end up being split between your attorneys, with a sizeable amount going to the financial professionals. That is money that could be used to fund your family’s future if you stay out of court.

Focus on problem-solving, not fighting. Don’t let meetings with your ex turn into posturing to show who is in control or how smart you are. Settling your divorce is the problem you confront, and it won’t get solved through fighting. You can’t get everything you want in divorce, so figure out what is most important to you and let the rest go. You’ll end up with a better agreement, a less tumultuous relationship, a happier family, and a healthier future.

Collaborative Divorces Save Money

by Sandra Joan Morris
CA State Bar Certified Family Law Specialist
Past President, American Academy of Matrimonial Lawyers

How expensive is the collaborative law process compared to other methods of resolving cases? As a family law trial attorney, I heard for years that the collaborative process is much more expensive because if it ends, the team members are off the case. However, my experience is that the collaborative process is usually quicker and less expensive in most cases, and much less expensive in complex cases, than other methods.

Even if fighting it out at the courthouse was a good way of resolving problems, at this time the lack of funds and important resources for the court system make litigation drawn-out, expensive and inadequate. In law cases, what takes time, costs money. For this reason alone, more and more litigants are looking for ways to resolve their cases without resorting to the court system.

Collaborative Divorce Saves Money

Collaborative divorce can save time, and time in money in legal proceedings

Any alternative to litigation could cost more if it fails, since you have to add its cost to the cost of going back to, or starting, litigation. Even if it succeeds, it could still cost more money if it took a lot of time to resolve. However, because both parties control the outcome, and in a far less acrimonious way, the benefits are immeasurable. Some judges say that if both parties go away upset, it was probably a good decision. The collaborative process strives to have the parties reach a resolution that is a win for both of them.

Mediation and settlement conferencing are the most common current alternatives to litigation. Both usually take place after all of the financial information has been provided (the “discovery” phase of the case,) and both often represent a last-ditch effort at resolution, frequently on the steps of the court house. Unfortunately, getting to this level of knowledge is usually the most expensive part of a family law case.

In a complex, high asset case where a lot is at stake and a lot is disputed, this phase can go on literally for years. This process is polarizing. By the time it is done, the parties are even angrier and more distrusting than when it began. Sometimes the lawyers are, too.

By contrast, the collaborative law process starts at the very beginning of the case. The  financial expert on the team gathers all financial information in an informal but thorough way. When you agree to the collaborative divorce method, you agree to cooperate by providing this information, and if needed, access to your personal financial advisors.

Within months, not years, the financial expert has all of the needed information, and can provide reports on matters such as how much income is available to pay support and what is the marital standard of living. The financial expert can promptly arrange for the appraisals of personal and real property.  The economic and time savings in the costs of discovery is enormous. You have saved time, and therefore saved money.

Even if the collaborative process ends before there is a settlement, the financial documents that the neutral financial expert got can still be used. All or portions of the reports of the financial expert also can be used if both parties agree, which can help to narrow the future issues.

Most litigated cases take at least two years to complete and get to trial or settlement.  Many take far longer. At that point the “back-end” (after discovery is complete) mediations or settlement conferences can take a few sessions, but I have had complex cases that have taken a year or more to resolve in mediation or settlement conferencing. On the other hand, my experience in collaborative cases is that they usually conclude in just over a year.

The collaborative teams include a mental health professional coach for each party, an attorney for each party, a neutral financial expert and, if needed, a neutral child specialist.  Litigated cases usually have an attorney for each party, a financial expert for each party as well as possibly a neutral expert, a custody mediator and perhaps a custody evaluator. Not only are there fewer professionals in the collaborative process, but they do not overlap their work and are united in being solution-oriented. The addition of the collaborative coaches is a very valuable component. Coaches help the parties to learn to communicate more effectively and productively, which allows them to focus on their settlement issues. The education they provide is invaluable both for the settlement process, and after the case is over.

Does a collaborative divorce cost more? Since it saves time, discovery expense, and emotional stress and exhaustion, my answer is “no.”