How to save money in California divorce

Divorce can be very expensive.  Not only are you separating households, now working with the same funds but supporting two homes (and two rents/mortgages, two sets of utilities, expenses of duplicate furniture, etc…), but you may be taking time off work (unpaid, of course) for court hearings, spending money on filing fees, and – of course – hiring a lawyer.  And lawyers?  Can be very expensive.

I do what I can to keep the costs down for my divorcing clients, from offering flexible options for payment (no, not monthly payments but I generally try to “break down” the case into more financially-manageable pieces for the client), family law coaching, and divorce mediation, but the cost is not entirely under my control.  What my clients do – or don’t do – essentially drives the path and cost of the divorce.  So, regardless of whether you have an attorney or not, here are some ways to keep the costs of your divorce down:

  1. Manage your emotions.  Divorce is incredibly difficult even in the best of circumstances.  It is likely that you have some strong emotions around it.  But the court and legal process generally will not be concerned about these emotions, and the more  you bring them into your divorce, the more you will likely pay.  Whether it’s spending excessive time with your attorney discussing the emotional issues or pursuing a losing issue because of an emotional attachment, emotions can bankrupt you when they take center stage in your divorce.
  2. Get professional help. As a part of managing your emotions, get the support you need for them by finding qualified mental health professionals to help you through it.  Your lawyer, your family, and your friends will be a great support during this time, but do not mistake any of them as qualified advice helping you through the roller coaster of emotions in divorce.  Find a therapist if you need one.
  3. Get – and get rid of – qualified professional help when appropriate.  Hire professionals who are going to work with you, for you, and who are on the same page as you.  If you feel like your lawyer doesn’t care, or is gouging you, or won’t pay attention to you or return your calls, then get rid of him/her.  Your divorce is yours, and you should have legal counsel that you feel comfortable with, who understands what is important to you, and who is reasonable and professional about fees.  Same with your therapist.
  4. Play fair.  The court and legal process in California has no patience for bids for revenge.  Mud-slinging and nasty declarations for the purpose of hurting the other party can not only rebound and hurt you, but can cost you unbelievable amounts of money.  They also drag on the process, increase the hostility between you and your spouse, and ultimately hurt your children.

Following the money in California divorce

Since we’re talking about California divorce this week, I thought I’d add a note on finances, since they seem to be at least one of the top reasons for divorce. Untangling your financial lives can be really tough, even out of court.  Here are some things to consider:

During divorce:

Tax implications – what are the tax implications of your filing status as you go through divorce?  What are the implications of your asset division?

Expert fees – what are your attorney/accountant/child custody evaluator/financial advisor fees going to be?

Support – there are tax implications to paying and receiving child and spousal (or family) support in California. If you just take the highest/lowest amount because funds are tight, you may be in trouble later.

But the divorce process is just the beginning.  You also have to consider the financial aspects of your post-divorce life.  You need to consider these things as soon as possible, and not wait until it’s happened.

Post-Divorce:

Cost of living adjustment – here’s still the same bills, but only one of you is paying them.

Change in auto/home/health insurance costs

Increase in “combined” costs.  Did you share a Netflix account?

Lower savings and discretionary income due to the tightened financial belt.

Loss of assets in the divorce – that retirement home may be gone.

Needing/getting new employment – what do you do if you’ve never worked?

Reduced retirement income or savings – you may have thought you were set for retirement…now what?

The theme for this week seems to be planning.  Planning is you’re thinking of divorce, and planning if you’re in the process of divorce.  Don’t let the process or anything that happens in the process to take you by surprise.  It doesn’t have to if you know what to look for and where to look. Need more help? Click here to make an online appointment.

Secrets of child and spousal support (alimony) in California divorce

One of the hot button issues in divorce is child and spousal support. It’s a hot button because it involves money, and money is a leading cause of divorce. Many couples are already tense about money, and when you add in the support issue, things can blow up. The problem is one of simple math:

With a married couple, you generally have one household surviving on the income of two parties. You take that household and divide it in two when the couple separates, and you have the same amount of money (not enough) now supporting two households instead of one. Ouch.

Regardless of who moves out and who is the spouse paying for child and/or spousal support, it hurts both parties. The one paying can see in his or her paycheck that the amount being brought home is, in some cases, actually smaller than the amount being paid for support. The one being paid just looks at the money coming in and the bills to be paid, and can’t quite see how to resolve the disparity.

Arguments, often heated ones, ensue. The key is to recognize that not only is this going to happen, but to catch it early and address it. It isn’t going to be easy for either of the spouses, and they had better be prepared. Both spouses, in most cases, are working hard to maintain their lives while they go through the difficult time, and a small amount of understanding goes a long way.

Need more help?  Click here for our FREE Divorce e-Course.

Financial Advisors & CDFA in California divorce

I met with a financial advisor today, and he has the designation of being a CDFA, or “Certified Divorce Financial Analyst.” He is an expert with working with people who are divorced, getting a divorce, or thinking about it. I am a really big proponent of getting the help you need in divorce. It’s not easy and there are just so many mistakes you can make – and avoid – by getting good help.

The more I think about it, the more I think that it’s critical for someone who is divorcing to have the support of a financial advisor. Take the situation when you’re dividing accounts. Say you have an account with Schwab and an account with another broker. They each have roughly the same amount of money in them, so you and your soon-to-be-ex decide to each take one account. But does anyone look at the projections for the accounts? What if one account is doing poorly and one is doing really well? Attorneys aren’t trained to make those kinds of evaluations. This is a reason to see a financial advisor – especially a CDFA – if you’re getting a divorce, or even thinking about it.

Another reason: Generally, I saw in my practice that in most couples, one spouse was ‘in charge’ of the money in the relationship. They handled the bills and expenses, did the taxes, and dealt with the CPA or financial advisor. Often, the other spouse had not a clue what the couple had, leaving the decisions up to the other. While this is (I think) a reasonable marital division of labor, it causes big problems for the spouse in the dark when the issue of divorce comes up. Suddenly the spouse who doesn’t know anything has to take a crash course in finances, household budgets, and the like. He or she also probably wants nothing to do with the couple’s advisors, as they’re likely to go with the person they’ve been dealing with all along. This is where a financial advisor can mean the difference between struggling and flourishing.

Finally, and you may know this about me, I am a planner. I do estate planning and feel it’s absolutely essential that EVERYONE has an estate plan – SOME kind of plan – and if they have children or a house, it becomes urgent. But that’s another story and another blog. The same is true for financial planning. Right now, you’re at Point A in your life. At some point, you want to get to Point B. How are you going to do that, financially? What if you don’t even know what your Point B looks like? You find these answers by utilizing the help that’s around you, and in this case, it’s a financial advisor.

I am spending some time in the next few weeks talking to several CDFAs, and I’ll pass along the pearls of wisdom I learn. I meet with them so that I can feel comfortable referring my clients to them.

Attorney fees in California divorce

Attorney fees in a family law case can be astronomical. Most attorneys require you to pay their fee up front, too, so the financial burden on family law litigants can be hard. There are a couple ways to ease this burden.

First, if you are the party receiving support, or if your opponent is causing you to come to court unnecessarily or too frequently, you can ask the court for your opponent to pay some or all of your fees. You can also take advantage of unbundling, which is a different way of handling the attorney-client relationship. You pay your attorney for specific tasks or advice as opposed to the attorney taking over your case. This is what the McPherson Law Group is all about. This gives you much more control over your case and is easier on your pocketbook. Finally, there are all kinds of resources at low or no cost, including county resources (such as classes or facilitators at the court house) and consumer resources (such as books or online help).

Getting through your California divorce

There are many aspects of California divorce: there are the legal aspects, obviously, and the financial aspects. But there are also the emotional aspects and the lifestyle aspects that are too often overlooked. Divorce is, above all, a process and an adjustment, and we need lots of support, in various manifestations, to get through it.  Here is some advice on this very topic.

The easiest way to mess up your California divorce: don’t make these mistakes!

Everyone these days is looking for ways to keep costs down, and divorcing couples are no exception.  We see all over the place services offering a divorce for $399, or online ads offering similar low prices for divorces.  These services are generally documents preparers.  Document preparers generally have some experience in filling out the forms necessary for a divorce, but they are not lawyers, do not and have not gone to court, and so they do not know the ramifications for improperly filling out your forms.  They could be depriving you of a benefit that you need, but that you don’t even know about!  Too many times I have had clients come into my office, needing me to clean up a mess a document preparer created, costing them much more money than if they had come to me in the first place.  Use a document preparer at your own risk.  Better yet, don’t use one at all.  Spend a few dollars more at the outset to make sure you get the professional, knowledgeable help you need.

In addition, you must be very careful to complete your forms properly.  In divorce law, there are a great number of forms and disclosures you need to do, such as income, expenses, assets and debts.  You sign these forms under penalty of perjury, so they need to be accurate and complete.  But in addition to these forms, there are other forms that need to be filled out to allow you to let the court and other side know what you want, actually get what you want when it becomes time, have your documents accepted by the court, and have your case completed properly.  While most are straightforward, some have tricky elements that may require a professional to ensure all of your rights are protected.  Do it right the first time to save yourself immense hassle later.

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