My Two Cents
Personal-finance columnist Charlotte Cowles asks the nosy, revealing, sometimes uncomfortable questions about money so you don’t have to.
Photo-Illustration: by The Cut; Photo: Getty Images
No one wants to get divorced. But no one wants to be stuck in a bad marriage, either. And sometimes, you have to choose between the two — and accept the financial fallout if you go your own way.
Commonly cited research shows that women tend to be worse off money-wise after divorce; they typically see a sharper decline in household income and a greater risk of poverty than their male exes, especially in their first year post-split. But it doesn’t always have to be so bad — and it often isn’t. “There’s a common fear of losing everything you have when you get divorced,” says Nanci Smith, a divorce lawyer who practices in Vermont and New York. “But that fear is outsized to reality, and it shouldn’t keep people in unhappy marriages.”
If you’re contemplating a divorce but you’re spooked by the prospect of financial ruin, here’s a step-by-step guide — with input from divorce lawyers with decades of experience — to getting your money (and your mental state) in order before you start the process.
Whenever a potential client comes in for a consultation, Steven Peskind, a family lawyer based in Illinois, presents them with a checklist of things to do if they’re considering a divorce. “Sometimes it can take years for a person to get to the point where they feel ready,” he says. “But the list offers guidance in the meantime.”
The first thing on the list is to avoid taking on new financial obligations. “If a divorce is imminent, this is not a good time for major purchases or new financial commitments,” he says. “Limit new debt, keep credit card balances low, and stay as liquid as possible.”
You’ll also want to compile a list of all your assets and accounts, including credit cards, bank accounts, retirement accounts, and vehicles or homes you own. “While you’re at it, gather your past few years of tax returns,” advises Peskind. If you’re worried that your spouse might be hiding assets, “keep your eyes and ears open and your mouth shut,” he adds. “If they get letters from a bank you don’t recognize, take note. A lawyer can issue a subpoena for financial information during the discovery process, but having it at your disposal early on helps us move forward more quickly.”
And finally, work on building your own individual credit if you haven’t already done so. “I encourage people to apply for a credit card while they’re still married because they can piggyback onto their spouse’s credit to become more creditworthy,” he says.
“I believe that divorce is about 80 percent emotional, 10 percent legal, and 10 percent financial,” says Smith. “The way that people get financially destroyed by a divorce is when they do not manage their intense emotions.”
So to the best of your ability, get your head on straight. See a therapist, find a support group, and figure out how you’re going to get through this as peacefully as possible. You may not be able to control your spouse, but you can control how you react to them. “The level of conflict is a direct indicator of how expensive their divorce is going to be,” says Renee Bauer, the founder and managing attorney of Happily Even After Family Law, based in Connecticut. “A couple’s behavior affects legal fees more than any other factor.”
Of course, if you’re concerned about your safety or there’s been abuse, that’s a different scenario, and you should seek support immediately. The National Domestic Violence Hotline is the best place to start and can direct you to resources in your area.
“If you are thinking about divorce, before you do anything, consult with a collaboratively trained divorce lawyer in your area,” says Smith. “Those lawyers are trained to keep you out of court and can advise on ways to proceed that will minimize friction and manage costs.”
Most lawyers will charge you for a consultation — typically around $100 to $200 or higher, depending on their hourly rate where you live — but it should be worth it. “They will ask about your circumstances and then help you devise a path forward,” says Smith. They can also help you figure out a timeline: “Does this need to happen in the next six months, or can you give it a year and set yourself up better?” And they shouldn’t try to get you to sign anything or pay a retainer fee, she adds — that ball is in your court.
Some lawyers will offer a free consultation, but it won’t be as comprehensive — usually 15 or 30 minutes. If you’re low-income or really can’t afford a lawyer, Smith recommends trying to find pro bono help through your local bar association.
If at all possible, do not surprise your spouse with divorce papers. “It sets the right tone to give your spouse a heads-up,” says Bauer. “No one wants a stranger knocking at their door and serving them out of the blue.” If you’re estranged, give your spouse a phone call or ask to meet them for coffee; if you’re in couples counseling, maybe bring it up there. “It’s best to do it in a neutral space,” she explains. “That creates an environment of respect, and communicates that you want to get through this as painlessly and cost-effectively as possible.”
There are basically four methods for getting divorced, although they vary from state to state. The first and cheapest way is to DIY it: You can download and fill out all the paperwork with your spouse, go to the courthouse, and file it yourselves. (Some law libraries also offer resources and guidance for doing so.) There’s typically a court filing fee, usually somewhere between $100 to a few hundred dollars, depending on which state you live in. “This can be a good option if you’re in complete agreement over all the terms,” says Smith. “It’s usually best for a short-term marriage, zero to five years, probably with no children, where you’re on relatively equal financial footing and there’s no question of alimony.” Smith recommends having a lawyer (or preferably two, one for each person) check over all the forms before you file them, which would cost an hourly fee.
The next level up is to do mediation, which involves hiring a neutral third party with knowledge of divorce law to help you resolve disputes and iron out your divorce agreement before you file it in court. Mediators are cheaper than lawyers, and since you and your spouse are sharing one — you don’t each hire your own — that saves money, too. “Mediation is good if you have equal bargaining power in the marital dynamic, you’re aware of all the assets, and there’s low conflict or just maybe a little bit of conflict around some questions,” says Smith. “A mediator is not going to give legal advice, but they will help manage the conflict for a relatively modest cost.” You might wind up spending around $1,500 to $5,000 total, she adds, depending on the amount of conflict and the mediator’s rate.
The third option is a collaborative divorce. “If anything is in dispute, I strongly advocate for the collaborative process as a less adversarial and more holistic approach,” says Smith. “You’ll each have your own lawyer, and there will also be a mental-health coach and a financial neutral party who work as an interdisciplinary team.” This is more expensive than mediation, of course — some estimates peg it as ranging between $15,000 to $50,000 — but that’s much less than litigation because the team is trained to contain disputes.
Finally, worst-case scenario, you’ll litigate. This is not ideal, but you can’t always control what your spouse will do — and divorce can bring out the worst in people. “Going to court usually involves a high degree of conflict that has been unmanaged, and then has the highest cost financially as well as emotionally,” says Smith. When it comes to legal fees, the sky’s the limit. It’s in everyone’s best interest to avoid this if you can.
“There’s a major misconception that a divorce court will punish a spouse for bad behavior, like infidelity,” says Bauer. But that’s usually not the case. “The court’s primary role is to untangle assets fairly” — which is to say, equally — “not to exact revenge,” she explains. “That new show, All’s Fair, where everyone’s out to get back at their spouse, is not a realistic perspective of what actually happens in family court.”
There is one exception to this rule, though: If a judge learns that marital assets were misused (say, to get hotel rooms for a mistress) or concealed by one party, then there might be consequences. “If someone’s hiding accounts or not being truthful about disclosing their finances, the court will reprimand them for that, and may give some or all of those funds to the other person,” says Bauer.
Peskind also recommends making a plan — including a budget — for what your life will look like after your divorce is over. You might have to move, get a different job, tighten your belt, and recalibrate. “Two people supporting two separate households is just more economically burdensome than one,” he says. But don’t let this keep you trapped, he adds. “Change is inevitable, but total destitution is unlikely.”
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