Marriage, n. The state or condition of a community consisting of a master, a mistress and two slaves, making in all, two.
– Ambrose Pierce: The Devil’s Dictionary
Nobody gets married with the intention of calling it quits. Of walking away. Leaving community.
When we enter a marriage, we hopefully know that it will take consistent, hard work to make it work. With the knowledge that sometimes, it just doesn’t.
Divorce is a tough call to make. It’s likely to be emotionally disruptive and, in some cases, permanently traumatising.
The first hard knock happens right off the bat – couples may agree to divorce only to realise that it doesn’t necessarily mean that both parties are ready for the divorce process, or to divorce each other.
How should you then approach the initial phases of separation, so that you can protect your personal and financial well-being?
Here are a few things to consider.
Making the decision
Be clear about the health of your marriage. Understand your reasons for wanting a divorce and determine if reconciliation is out of the question.
Don’t rush to make a life-changing decision.
Dr Bruce Derman, PhD, author of “We’d Have a Great Relationship if it Weren’t for You”, is a California-based clinical psychologist who specialises in helping couples through separation.
He stresses the importance of understanding your reasons for wanting a divorce and identifies 8 specific questions that you need to ask yourself before you consider a divorce.
For example:
- Do you sincerely want to get divorced, or are you only considering it out of anger or frustration?
- Will you be able to withstand the emotional rollercoaster of the process, and deal with the negative consequences that may arise in terms of your children, finances, or lifestyle?
- Will you be able to support yourself financially, mentally, and emotionally after the divorce?
It is only once you’ve articulated your thoughts, and spoken your reasons for divorce out loud, that you can start to prepare your immediate action points.
Understanding the basic mechanics
It’s important to research to get some understanding of how the divorce process works. Start by knowing and understanding the framework of your marital regime (read more here), because it will determine how your split will have to be navigated in financial terms.
Educate yourself but search for specific questions and answers. You don’t need to become an expert in the field.
Mediation
In these early days, investigate the option of mediation. This is a very powerful way of ensuring that the divorce process runs as peacefully as possible. Here, spouses make their mutual decisions outside of a court environment, which is especially beneficial when it comes to creating a suitable parenting plan for children.
Remember that divorce is essentially about two things:
- how you will divide your assets, and
- how you will take care of your kids.
You want to negotiate and agree on both in the best way, via the fastest and least emotionally damaging route.
So, if possible, you want to aim for the scenario where you attempt mediation first and only approach the traditional lawyer route if mediation fails.
Coming to grips with the money
After your initial research, comes a phase of financial preparation, so that you have a fair amount of clarity moneywise before you go to see a mediator or lawyer.
This phase includes the following:
Make sure that you have a contingency plan.
First and foremost, know that divorces take time. Have a formal agreement that both spouses will continue with their current financial obligations towards the household until agreed otherwise.
Alternatively, ensure that you have sufficient salary income, or accumulated savings, or access to a facility, that will ensure that you can meet your requirement for your living expenses for at least 6 -12 months.
Start the paper trail.
Begin collating your financial affairs. Make a list of your assets and liabilities, and get detailed statements for bank accounts, investments and retirement savings for at least the past year.
Get appraisals for assets such as your home, artwork, jewellery, and household contents. Make sure that you can stick a value to everything you own.
Budget. Budget. Budget.
Sit down with a highly detailed template and capture your current household expenses, down to the last penny.
A common mistake that people make is to underbudget or leave out certain expenses that are considered unnecessary post-divorce (for instance, holidays). Start with the current picture, don’t be shy about listing your actual expenses, but be honest about the amounts.
You may not necessarily be able to maintain your current lifestyle post divorce, but you want to get as close as possible.
Speak to your financial planner or hire one.
Engage with a financial planning professional right from the start.
It’s critical to have clarity on your financial situation after divorce before you get divorced. Often the reality of the financial outcome forces people to rethink and attempt reconciliation instead.
From a financial planning perspective, all assets are not equal in divorce, and unintended consequences, such as tax, may impact your part of the settlement. Beware that if private companies, offshore investments and retirement monies form part of the settlement, the picture is muddled because of restricted liquidity.
Safe to say, there are technicalities in the divorce process that are often overlooked because you are essentially in a process of planning for a future that is different to what you envisioned. Using a financial planner, in partnership with your mediator or lawyer, will allow you to negotiate better, but will also lay the groundwork for your financial future.
Kicking the legal process into gear
Once you understand what you are potentially separating from, it is time to find a mediator or lawyer.
Use someone reputable, and preferably on a good reference.
Your legal representative needs to be a specialist in the field of family law. You may need to speak to a few people before you find the right fit in terms of legal fees, and who you would feel comfortable working with.
From here a legal discovery process will follow. This is a process where you will identify your absolute financial needs, and how you will unravel your marriage. You will be guided carefully on all legal aspects, including the division of assets, maintenance agreements, and perhaps most importantly, the care and custody of your children.
As you enter this phase, don’t expect to “win” the legal battle. In divorce, there is rarely a true winner of anything.
Protecting your headspace
Whether your divorce happens because of your own choice, catches you by surprise, or through a mutual decision, it’s likely to be an event that will be emotionally distressing.
After all, very few people intentionally set themselves up to fail. It’s against human nature.
Here are a few ways that you can take care of your mental and emotional well-being as you work through the divorce process:
Have a shoulder to cry on.
Get the right kind of emotional support; engage in professional therapy if you need it. Find someone you can talk to, who can reciprocate your need for comfort and not just for the sake of gossip.
Be careful not to compare your divorce to someone you may know. Every divorce has a different set of issues so don’t base your expectations on someone else’s outcome.
Mind your ducklings.
Focus on your children, and include them in the process when it’s appropriate. Bite your tongue at times when you feel the urge to make a negative comment about your former spouse. They are not the ones who are getting divorced, you are. Just float the boat...for now.
Jump in with both feet.
Realise that you are equal to your spouse, no matter who owns what. Get involved in every aspect of the negotiations.
When it comes to the money side of things, participate vigorously but treat it like nothing more than a business transaction. Lower your emotional reactivity by putting your business cap on whenever you can. If you can deal with emotional issues separately, it will save you legal fees in the long run.
Keep your chin up.
Stay rooted in your integrity. Don’t underestimate your own resilience or your ability to cope. Try to be flexible and accommodating, but don’t be afraid to say when you disagree with a proposed outcome. It’s only over once you’ve both signed the papers.
See the big picture.
Focus on what comes after this chapter ends. Eventually, your divorce will be finalised. What are your plans? It may be helpful to enrol in sessions with a life coach who can help you find what your aspirations are, and how you will get there.
Finding the right professional partners
Divorce is a rocky road.
Even if you intend to separate on a good footing, you need to prepare yourself to face obstacles along the way.
Money is often one of the obstacles that make it very difficult for a couple to start untangling their former life together. It is highly emotional and unleashes reactions and behaviours that we sometimes cannot foresee or even control within ourselves.
At Foundation Family Wealth, we believe in having a strong basis for difficult times: we believe in the power of preparation.
Not surprisingly, we undertake rigorous financial planning for clients facing divorce informed by our extensive experience in this field. But we also know that there will be aspects that you will have to think about or manage yourself, or with the guidance of your legal representative.
We are fierce advocates of managing a separation through having collaborative relationships with our clients, their legal representatives, life coaches and therapists. We apply a holistic approach to our financial planning methodology, which includes all aspects of a person’s well-being.
We encourage you to get in contact with us if you are contemplating divorce. Having sound financial advice from the early stages will ensure that the overall process is kept as short as possible and this will go a long way towards your peace of mind and solid financial future.
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