Managing Finances During and After Divorce

No two divorce experiences are the same. That said, one thing is always true: divorce puts an undeniable financial strain on family members. We have already talked about the potential financial impact of divorce, and here we are going to discuss how to manage finances both during and after divorce or dissolution. The way you handle financial needs and concerns now can have a major impact on future financial health, so it is important to stay on track. Focusing on fundamentals will help to diffuse complexity and keep your sights on what is most important.

At the Law Offices Of Cara L. Santosuosso, LLC, our team of Cleveland divorce lawyers cannot offer financial advice, but they can offer insights on how to manage finances during divorce that are based on experience. As you work through divorce, dissolution, or mediation, keep these things in mind so that we can help you realize the most fair outcome possible.

The Cost of Divorce

One of the reasons why proper management of finances is so pivotal to a successful outcome for individuals seeking divorce is that the cost of ending a marriage can be very high. Typical Ohio divorces can run a couple anywhere from $4,000 to $8,000, with outlying cases going as high as $15,000 or even higher on occasion. From attorney fees and court costs to refinancing home or auto loans, paying for mediation, fees for expert testimony and evaluation and more, the costs for Ohio divorce can quickly stack up.

Take Tally and Make Needed Changes

Once you have decided that divorce is the path you want or need to take, it is a good idea to take a realistic look at your finances. Take totals of your assets and debts and get any relevant paperwork together. This may include:

• Bank statements
• Credit card statements
• Bills
• Mortgage statements
• Investment portfolio statements
• Income streams
• Debt and liability documentation
• Pension contributions
• Life insurance policies

Besides knowing the amount of liquid assets you have on hand and in bank accounts, you will also want to be aware of any available equity. Unless the marital home or vehicle will be sold, respective loans or mortgages that are in both your and your spouse’s name will likely need to be refinanced. 

Meeting with a financial professional is a wise move, even prior to filing for divorce. Having an expert’s opinion on your financial situation can give you a realistic viewpoint and perhaps lead to a more collaborative, less costly outcome. Avoiding additional fees by keeping your divorce out of the court is a key way to lower overall costs. This is the time to draw lines between wants and needs, be ready to compromise if possible, and to save as much as possible. An emergency fund can be invaluable in a future where you are the sole provider in the home.

Evaluate and Update Financial Accounts and Insurance Policies

Married couples often use each other as emergency contacts and are likely listed as beneficiaries on each others’ life insurance policies, pensions, annuities, and retirement accounts. They may also serve as executors on each others’ statement of end-of-life wishes, from medical care to disbursement of assets in an estate plan, such as a will or trust. All of this will typically change after divorce, and it will require some reworking to ensure that both of you are able to list the desired individuals on your policies and accounts. 

Ohio requires any retirement accounts acquired during marriage to be seen as marital assets and thus these may be subject to division and equitable distribution as part of divorce proceedings. The court generally does this via either a Qualified Domestic Relations Order (QDRO) or a Division of Property Order (DOPO). 

If your future financial wellbeing was fully dependent on your spouse’s retirement savings, this is also a good time to set up a retirement savings plan of your own. Instead of easily becoming overwhelmed, you could instead think of this process as an opportunity for a fresh financial start and the beginning of your new, post-divorce life. Working with a trusted financial advisor will help to make the transition as smooth as possible.

Distribution of Assets/Property

Judges aim to fairly and equitably disburse what they deem to be marital property. However “equitable” does not mean that each spouse will reliably receive half of their shared assets. Instead, the judge will consider a range of factors when making a determination. These can include:

• Length of the marriage 
• Health and age of each spouse
• Income and earning capacity of each spouse
• Typical standard of living while married
• Property value(s)
• Value of other assets
• Total debts/liabilities

Arguably, the most important way to ensure that your finances are protected during divorce is to agree to work together with your spouse. Mutual cooperation can go far to make the disentanglement of assets easier, while also bringing down the overall cost of your divorce. 

If you can’t agree how to address household expenses during the pendency of a divorce, the Court can issue a temporary support order, identifying which spouse will be responsible for paying some or all of the marital expenses.  

Be Practical About Post-Divorce Needs

When evaluating your current standard of living and joint income as part of a divorce, it is very likely that the future could look different. Reduced income could mean that all the “extras” involved with raising children and the cost of maintenance for a vehicle, home, or other property could be proportionately higher when only working with one income. Earnings may have decreased, while the costs of childcare and home repair seem to consistently increase. For this reason it may be more practical to sell the marital home, even if it means giving up that measure of stability and familiarity.

Of course, every situation is different. That is why individuals seeking divorce need to be practical and honest about their current financial situation when assessing their future financial needs. Working with an experienced collaborative divorce lawyer ensures that all these variables are accounted for and are included in the divorce decree. Whether you are the individual receiving or making alimony or support payments, you need to know and plan for how changes to income and housing will affect your financial situation. 

Mediation vs Litigated Divorce

What does the type of divorce you seek have to do with your financial situation? Actually, it can have quite a large impact. A traditional divorce often involves contested issues and time spent in court. However, not all divorces require court proceedings. 

Mediation, as opposed to a litigated divorce, is often a faster, more affordable, and less stressful process. It also ensures that family-related decisions are made by you and your spouse, and are overseen by individuals who take the time to get to know you and your circumstances. On the other hand, a traditional divorce could see such fundamental decisions entrusted to a judge who spends just a few hours with you. Mediation can take place with just you, your spouse and your mediator; or, each spouse could include their respective attorneys in the process.  

Experienced Divorce Attorneys in Cleveland, Ohio

When a couple is considering or undergoing a divorce, potential financial implications have to be taken into account. Emotions run high and the desire to start a new life can be strong, but these cannot cloud reality when spouses look toward their individual financial futures. If children are involved this is especially true, and some of the decisions made today could end up affecting parents and children for years to come. 

In the end, every collaborative divorce lawyer or child custody attorney aims to ensure the best, most supportive environment for children as they adapt to their new life. At the Law Offices Of Cara L. Santosuosso, LLC, that is our goal too. If you are contemplating divorce but need guidance regarding key financial considerations, please contact us–we are ready to help.