How Much Have You Budgeted For Your Divorce?
One of the questions that draws the most blank stares from clients is “How much have you budgeted for your divorce?” As it turns out, most people have never considered the question before I ask. That makes sense; people are in a whirlwind of emotion and fear at our meetings. But, it is one of the first issues that needs to be addressed in a divorce case.
One important reason is that the budget can often influence the divorce process that the client chooses. Cost conscience clients often choose mediation or collaborative divorce in lieu of lawsuits. The less money clients spend in resolving their legal issues, the more they have to carry into their new lives.
Another important reason to consider the budget of divorce is post-divorce finance. As Alan Feigenbaum and Heather Linton point out in their book The Complete Guide to Protecting Your Financial Security When Getting a Divorce, the cost of maintaining the same lifestyle after divorce is 25 to 50 percent higher than during the marriage. There are many reasons for this increase:
– addition of an extra rent or mortgage payment in the family
– addition of insurance, tax and maintenance costs for new residence for one spouse
– increase in cost of health insurance when one spouse is no longer covered under a family policy
– increased tax liabilities from filing separately instead of jointly
– increased child care expenses when one spouse goes back to work
– travel expenses for children in custody cases
The cost of the legal process as well as the increased costs of life after the divorce need to be factored in to the big financial picture. After all, there is only so much money to go around. Clients who pay attention to the big financial picture and think about the budget for their divorce often emerge from the divorce process on much more solid financial ground.
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