By Ed Vargo
No woman says “I do” thinking she’ll be signing divorce papers one day. But, with a divorce rate hovering around 50%, it’s a thought that should cross your mind even if you don’t believe it will ever happen to you (and you should believe that).
A fact buried within that 50% divorce rate: nearly 70% of all divorces are initiated by women. (1) It’s even higher if you’re in the Gray Divorce category (age 50+).
Despite the data, I don’t recommend planning for divorce before getting married. However, you should have (at least) a cursory understanding of how divorce law works in your neck of the woods. As a father to five daughters, you’d better believe my girls will know how divorce works well before they get married. Heck, we’ve already talked about it and they’re not even seriously dating anyone! An ounce of prevention…
Divorce is a highly emotional life transition. With it comes many financial complexities and decisions to be made. If you’re considering divorce or are just trying to get more informed, here are some things you can do to make the transition into life’s next chapter less stressful.
The Three Stages of Divorce
1. Contemplation Stage
The contemplation stage is when you start to gather information, weigh your options, and understand what you might be getting yourself into. It’s not a time to make firm decisions but to get knowledgeable and lay the groundwork for more significant decisions should they come to pass.
In this stage, make sure you take the following steps to educate and inform yourself about how divorce might impact you:
- Start with a clean slate: Whether you’ve been a casual observer of divorce (television shows, movies, headlines) or it hits close to home (family and friends), you already have preconceived notions about divorce. As much as possible, rid yourself of them and start with a clean slate. Second-hand divorce knowledge is suspect at best, disastrous at worse. Start from scratch by finding a few trusted sources for your divorce information and build from there.
- Knowledge is power: Yes, it’s cliché but that doesn’t make it untrue. Unlike other areas of law, divorce doesn’t operate from a uniform set of rules. It’s a bit more like the wild, wild west where things are wide open, with those most adept at playing the game having a distinct advantage. It’s critical to outline who you want on your divorce team. The ideal team consists of a family law attorney, financial advisor/CDFA®, divorce coach/therapist, and a personal support team. While this isn’t the time to build your team, you should have a short list of potential team members and a process for vetting them.
- Gather information: In divorce, you’re only as good as the quality of your information. If your spouse is hiding information from you, it can be difficult or expensive to discover the truth. The contemplation stage is the ideal time to gather all of the information you’ll need if you end up in divorce. Gather all financial documents – banking, investments, tax returns (3-5 years), liabilities, insurance, pay stubs, business financials, etc. When in doubt, grab it. You can’t have enough information. Do this now. The longer you wait, the greater the risk of misconduct on his part.
- Get Organized – Set up a filing system to organize tax records, investment documents, insurance policies, and legal information. It could be as simple as a file cabinet with hanging file folders or an elaborate digital filing system. Do whatever works best for you. Worst case: a shoebox of unopened envelopes sorted by sender.
2. Planning Stage
Once you decide divorce is the best way forward, the next step is strategically planning how and when to navigate the turbulent waters to come.
- Be formidable: Divorce challenges everything you thought your life would be. The person you thought was your life partner is now on the other side of the table. It’s heartbreaking and challenging. You must be strong and formidable. You can’t let moments of sadness or grief derail you from doing what’s needed. Believe in yourself, knowing you will be stronger and better off after the storm.
- Find your people: In the contemplation stage, you should have built a short list of potential team members. Now’s the time to take the next step and determine who’s on your team. This means choosing which professionals (attorney, financial advisor, therapist) you want on your team and interviewing/hiring them. You should also select your personal support team. Well-intentioned but counterproductive family and friends have derailed many a divorce. You should pick who’s on your team; they shouldn’t pick you.
- Advocate for yourself: It’s not uncommon for women, especially moms, to put everyone’s needs before their own. This is a noble quality and one to be championed, but it can be devasting if adhered to during divorce. As uncomfortable as it may feel, making yourself a priority during divorce is crucial. This is true when negotiating financial settlement terms (don’t get bullied, guilted, or shamed into taking less than you deserve) and for your self-care. Divorce can wreak havoc on your emotional and physical health, which isn’t good for you or the people who count on you. Making your needs a priority is one of the most giving and responsible things you can do.
3. Post Divorce Stage
This stage is about transitioning from being married to being divorced (or “single again,” if you prefer). Life changes drastically after divorce. Instead of dividing tasks with your ex, you become solely responsible for … everything.
But just because the divorce papers have been signed doesn’t mean the work is over.
Here’s what you can do to ensure you get everything you’re entitled to and build a solid foundation for the next phase of your life:
- Know your cash flow: Even if you anticipate having a significant net worth after divorce, it’s essential to know what your cash flow will look like moving forward. You don’t necessarily need to budget and track every expense, but you should know how much money you’ll have coming in and going out each month. Seeing these numbers in writing will help you get comfortable with your new cash flow and help you prepare for any unexpected expenses.
- What property needs to be divided: Review your decree and list the action items necessary to ensure you get what you agreed to. What cash needs to be settled out and paid to you? What property needs to be sold? What retirement accounts need to be split, and what is the process? Is a QDRO required? What support is owed?
Review your decree to understand how much needs to be paid in spousal and child support, if applicable. Understand what steps need to be taken to ensure timely payment and receipt of these dollars.
- Update everything: Legal name change, update ownership on all assets (do names need to be removed from accounts?), update estate planning documents, update/refinance any liabilities into your name alone, change all beneficiary designations and emergency contact information.
No matter what stage you are in, you should know what you’re up against and plan for it. Divorce is a time of change, pain, growth, and opportunity. How your next phase of life unfolds is significantly influenced by how well you navigate the divorce process. You have one chance and one chance only to get this right. Don’t start the next phase of your life under a cloud of uncertainty; have a plan.
Partner With a Professional
At Burning River Advisory Group, we’ve dedicated our professional lives to helping women navigate life’s most challenging moments. While achieving financial independence and peace of mind is possible, it doesn’t “just happen.” To find out how we can help you gain peace of mind, call 216-404-2420 or email evargo@burningriverag.com today.
About Ed
As Founder and CEO of Burning River Advisory Group (BRAG) and enlightenHer, Ed’s mission is to help women take control of their money and to live their version of a meaningful life. His life experience testifies to how money can be the best of servants or the worst of masters, and why each of us needs to be in control of our money.
As the father of five daughters, Ed is raising his girls to be strong, independent, formidable women. He believes being knowledgeable and in control of their money is essential. Ed is committed to teaching them how to be empowered by money, not weakened by it.
Ed takes this mindset into his work. He’s passionate about helping women take control of their financial lives once and for all. He created the Servant Money Method (SMM)TM, a proprietary financial life planning process designed to give women the ability to live a meaningful life without a money anvil hanging over their heads.
Whether that’s exiting the rat race integrity intact, starting over after a difficult divorce, moving closer to be near the grandbabies, or simply sleeping better at night knowing they’re not going to outlive their money. The SMMTM takes the financial “heavy lifting” off their clients’ plates so they can focus on what matters most – pursuing a meaningful life.
Ed’s clients know their success is at the forefront of all he does, and he works tirelessly to advocate for them. He strives to be their “first call” – the person they turn to when they need objective advice, accurate information, or a calm and experienced voice to help them through tough times.
Ed believes we should use our money to make a life instead of using our life to make money. His values-based mission allows his clients to do just that.
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(1) https://www.whitleylawfirmpc.com/3-reasons-why-women-initiate-divorce-more-often-than-men/
