The financial realities of divorce no one is talking about. Divorce: Avoiding the Financial Pitfalls

Marriage may have its challenges but divorce can make even the most rational people lose sight of their ultimate goal: to end a partnership without wreaking havoc on their economic well-being. Understanding the financial process of getting a divorce and avoiding critical mistakes can provide clarity about your financial circumstances and help you make quick financial decisions. Most importantly, it will preserve your wealth. Consider the following examples:

 Jennifer was contemplating divorce after 25 years of marriage. Her husband, Michael, was the primary wage earner in the household and they had been financially secure for many years. However, Jennifer started to notice some unusual activity that raised red flags: despite claiming that business was very slow, Michael purchased a boat and an expensive watch; mail correspondence from completely different banks arrived in the mail; and personal expenses were being paid out of Michael’s company’s funds. Despite Jennifer’s numerous offers to help, Michael kept a tight rein on the management of their finances. Prior to filing for divorce, Jennifer, with the help of a forensic accountant, discreetly researched and documented all the financial information that she could find. When she filed for divorce, she had a clear understanding of her assets and a well-thought out list of priorities which expedited the negotiations process.

 Moral of the story: Do your homework. Learn to identify the red flags and plan how you want to negotiate.

 After 20 years of marriage, Samantha and John fell into a routine. Samantha took care of the kids and the household and John handled all the finances. Samantha knew that her family was financially healthy, but she never took the time to learn about the details of their finances. When John suddenly asked for a divorce, the emotional pain of separation was multiplied exponentially by Samantha’s panic about money. Samantha found herself scrambling to identify the couple’s assets, how much they were worth, and where they were being held. Because of the antagonism both parties felt, Samantha and John made emotional, rather than strategic, decisions. Instead of taking the time to truly understand the value of their holdings, Samantha and John spent a great deal of money fighting over assets that would diminish, rather than preserve their wealth.

Moral of the story: It’s important to see the big picture. Learn what you have and what it’s worth now and in the future.

 Jane and David were married 10 years before they decided to end their union. Several things led them to believe that their divorce would be seamless and simple: they had no children, both had lucrative careers and they had always maintained separate investments of approximately equal value. During the process, Jane discovered that, unbeknownst to her, David had spent a significant amount of money on expensive personal items, which he paid for with his credit card. During the divorce proceedings, David agreed to cover the cost of the very high bills. After the divorce, however, had not paid the bills and the Jane found that she was still jointly responsible for David’s debt and her credit was about to be ruined if it was not promptly resolved.

 Moral of the story: Leave no stone unturned. Learn what you need to know about debt in the marriage prior to divorce.

 Our team of divorce experts will walk you through this journey and help you understand where you stand financially, how to prioritize the steps of the process and ways to avoid the common, and potentially devastating, financial pitfalls of divorce.

 {My Man is Not} My Plan partner, Caridad Vasallo, a highly experienced forensic accountant in KSDT’s Litigation Support Services Practice, will discuss common divorce scenarios and success strategies. With over eight years of experience providing litigation support services, Ms. Vasallo specializes in assisting high net-worth individuals in marital dispute cases. She works with clients and their attorneys to provide equitable distribution charts, alimony and child support calculations, business valuations, tracing and identification of concealed assets and expert testimony in court.

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