Divorce is one of the hardest things a person can go through—painful, complicated, exhausting, financially burdensome, and full of elements that are simply out of your control. It can all feel very overwhelming.
Another unexpected challenge, it’s all too common to be blindsided by unpleasant—even crippling—financial surprises.
And women are disproportionately impacted. Forbes reported in 2018. “An astounding 46% of divorced women recently surveyed by the online marketplace Worthy said that divorce brought with it financial surprises.”
Both spouses need to start with as much information as possible about the financial circumstances they may encounter.
Here are six financial factors that can take divorcing couples by surprise.
Community Property Rules
California is one of just a few community property states, which means that in a California divorce when your case goes before a judge, everything you own as a couple—anything you acquired while married (with rare exceptions for certain types of gifts and inheritances), including both assets and debts—will be divided equally. Formulas on how to achieve this can get quite complicated. Each spouse must prepare a complete full financial disclosure promptly.
Unforeseen Debts
Credit cards, student loans, mortgages, home equity line of credit, auto payments, business taxes… it all adds up. In some cases, unfortunately, one spouse has even hidden spending from the other and racked up significant debt. Newly divorced spouses can get blindsided by the amount they owe.
Losing the Family Home
Whether or not you can keep the family home is a particularly tough emotional issue and depends on numerous factors in the property division. The custodial parent, in particular, may assume they’re entitled to stay in the marital house to provide continuity and stability for the children. But the reality for many families is that it may be financially impractical or impossible.
The High Cost of Living Separately
Especially If you were a two-earner family sharing expenses big and small, you might be shocked to find that your cost of living skyrockets when you’re suddenly setting up a house as a single person. With your new rent or mortgage, essential utilities, cell phone bills, WiFi and streaming services, all kinds of miscellaneous household expenses, and the steep cost of health insurance, it usually costs more to live apart.
Alimony and Support
Many spouses are disappointed that they’ll receive less support from their ex than expected or that it won’t last as long as hoped.
Needing a Job
Those who have been stay-at-home parents and primary caregivers may be stunned to realize they have no choice but to enter or reenter the workforce.
Sticker Shock on the Divorce Itself
Many factors impact the cost of your divorce—particularly whether it’s contested or uncontested, whether you work together to come to a Marital Settlement Agreement or need the courts to intervene. What starts with a few hundred dollars in filing fees can climb into tens (or even hundreds) of thousands.
How can you better prepare so you don’t get a big shock?
Though it’s not unusual for one spouse to handle the finances in a marriage, both partners must stay involved and aware when it comes to investing, spending, and paying bills and share responsibility for financial decision-making. Hopefully, you’ll stay together for a lifetime, but if you divorce, you’ll be in a much better position to navigate the financial hurdles.
If you’re contemplating a split, it’s not too late. “Before initiating divorce settlement negotiations, it is imperative that women know their net worth as a couple and can quantify joint and separate expenses,” says Forbes.
When you’re in the divorce process, it’s nearly impossible to anticipate and avoid every unexpected matter that can crop up. Still, it helps immensely to understand common financial pitfalls and work with a knowledgeable financial adviser and an experienced attorney. It’s also preferable, when possible, for spouses to collaborate through alternative dispute resolution, such as divorce mediation, to avoid trial.
The veteran family law attorneys at SFLG believe that knowledge is power. They’ll help you understand the big picture and the details of your divorce process and support you through your dissolution with skill, compassion, and clear communication.
By Debra Schoenberg
