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Women and the Divorce Process
Whenever possible, we strongly recommend that both spouses attempt to work together and , through a divorce financial professional, negotiate their own settlement of marital assets, debts, alimony and child support. This process is empowering to both parties and is the most cost and time effective, minimizing legal fees and waiting.
Where this process is not possible due to emotional levels and inability to communicate, the only recourse is for both parties to secure their own legal representation. The lawyer now becomes a woman's sole source of guidance on most financial issues. It is, therefore, crucial for her to be aware of several areas which, in our experience, tend to "fall through the cracks." Most lawyers are not very financially sophisticated. In addition, there tends to be a legal mentality to get the divorce and attendant agreements signed and sealed and the divorce finalized. Then, it seems, they are "finished". You, however, will find that there are a number of "umbilical cords' still attached.
The following points should be carefully considered and discussed with your legal representative.
Case Information Sheet
Most times, your attorney will give this cumbersome package and ask you to fill it out....carefully. Part of this data consists of outlining what your living costs are for you and any children. Unfortunately, many attorneys do not carefully review this data with the client to determine how accurate and inclusive it is. This data is meant to help you support your contention of how much income you require to live a reasonable lifestyle after the divorce is finalized. Be aware that this amount is critical to helping your attorney negotiate alimony, if any and to the courts if your case goes before it. You must analyze your living costs on an item basis for the last 12 months. They may mean going back to credit card receipts and monthly statement to breakdown the charges by category. When in doubt about an amount, be realistic. This process will take time....but it is IMPERATIVE to assure you of realistic amounts. Remember, one can always go back to court to increase/decrease alimony and child support as long as you have the money to hire counsel and the time and emotions to wait out a verdict. However, we recommend an agreement which is as comprehensive as possible at the outset to reduce the likelihood of future court actions.
List Of Itemized Costs To Consider:
New Wills, Beneficiary Designations
Discuss with your attorney, immediately ,writing a new will. Durable Power of Attorney and even a Health Care Directive. Remember that your previous will probably names your spouse as primary beneficiary and any children as contingent beneficiaries. You might certainly want to change primary beneficiary along with contingent.
Review any existing IRA, 401K, 403B or other qualified plan accounts which you own. When you established these accounts you were required to set up a primary beneficiary, again potentially your spouse. You need to redesignate new beneficiaries. If there are any minor children, you will need to consider setting up a trust situation of some kind to receive these funds until your child reaches majority.
Life Insurance on Payor Spouse
Part of your agreement should provide for your payer spouse providing a pre-set amount of life insurance on his life to protect your alimony/child support payments. Remember, these payments cease upon the death of your ex-spouse. You will still need to replace this lost source of income. By having life insurance in place, upon death, you would receive the death benefit which can be saved and used to offset the lost payment. Any financial professional can help calculate the "present value" of what these future payments would be taking into consideration children's ages to majority, your actuarial lifespan etc.
We strongly recommend that this coverage be separate and independent from any existing employer sponsored group life insurance coverage on your spouse. First, in the event he terminates employment, this coverage ceases. At that point, he might not be insurable for any number of medical reasons. Secondly, group policies can be canceled by the company. We recommend a new individual policy with you as "co-owner" of the policy. Therefore, in the event there is attempted coverage cancellation, non-payment of premium etc. the insurance company would automatically notify you as well.
Disability Insurance on Payor Spouse
If your ex-spouse becomes physically or mentally incapacitated and can no longer work, most employers have no additional payroll continuation program except for possible state unemployment/disability benefits. Again, any alimony/child support payments become jeopardized. A divorce agreement can address this issue and attempt to require private, individual disability coverage on the payer spouse. This coverage is generally expensive dependent upon age.
These are just a few of the many financially related details which must be considered and provided for in a successful divorce agreement.
If the divorce is being filed under one of the seven fault grounds (including extreme cruelty, adultery, abandonment, substance or alcohol addiction, institutionalization, deviant sexual conduct and incarceration), the 18 month separation period, required for a no-fault divorce, is waived. However, each ground for divorce has its own stipulations.
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