Divorce is emotionally wrenching for both men and women, however, let’s separate the emotions from the financial issues for the moment. During the first year following a divorce, a woman’s standard of living usually drops substantially, while the man’s actually increases. The responsibilities of motherhood often prevent the woman from pursuing a lucrative career. A less than favorable settlement can leave her without sufficient resources for ordinary living expenses. If support is awarded, it is usually for a brief period of time. Through preparation, a woman can ease some of the financial uncertainty that accompanies divorce.
If a woman seeks professional financial assistance before the divorce begins, she can avoid a desperate position. She typically needs help in understanding the tax and financial intricacies involved in divorce. A Certified Financial Planner who has studied divorce is ideal (Certified Divorce Financial Analyst). They will be familiar with tax issues involved in divorce, and be able to create easy-to-understand financial graphs depicting the outcome of a proposed financial settlement.
Often times, the decision of whether or not to go through with divorce can be partially influenced by the financial findings. When it comes to making sense of the numbers, determining spending and net worth, the services of a Certified Divorce Financial Analyst is irreplaceable. Attorneys are not trained in financial matters but are trained to offer important legal advice.
The Process of Divorce:
Courts do not usually inquire as to the cause of the divorce. All states allow “no fault” divorce – that is, it doesn’t actually matter who caused the breakup or who did what. However, some courts do consider behavior of spouses when awarding maintenance and deciding on a division of assets.
If you are the one filing:
When you have determined a proposed financial settlement with the assistance of a Divorce Financial Planner and have your attorney prepare a “petition” to serve to your husband, he can either work out an agreement through his own attorney or simply do nothing. If he does nothing, you will be granted a divorce by default. He cannot prevent the divorce from happening. If he “contests” the petition, he will make a counter-offer concerning property settlement and other issues.
If he has already filed:
Move quickly to secure expert advice and a referral to an attorney who can “answer” for you. It is even possible to file a counter-petition. Be sure you secure advice on the financial assets and issues involving your future financial security. There is no reason to be swept along by the legal process when you can gain a large measure of control.
Grounds for Divorce:
Texas is a no-fault state, thus most cases use the grounds of “insupportability”, meaning the marriage has become insupportable because of conflicting personalities. There are six other grounds for divorce; however, insupportability will undoubtedly be the grounds in your divorce, no matter what the real reason. However, it is possible that misbehavior on the part of one spouse can produce a larger percentage of assets for the other.
Residence Requirement in State:
You or your spouse must have lived in Texas for at least six months and a resident of the county where you file for divorce for at least 90 days. If your spouse moves out of Texas, there are “long-arm jurisdiction” rules that still allow the divorce in this state.
Through attorneys or mediators, the spouses work out an agreement in order to avoid an expensive court battle. There is then a hearing wherein the judge reviews the settlement agreement and issues a divorce decree. These are the final orders.
All financial records must be shared with the spouse, since the legal channel of “discovery” may be used to obtain the records anyway. Working with the financial analyst for guidance, you can be assured of understanding the financial matters involved.
If you request it, the court will issue a temporary order concerning custody, support, living arrangements and other matters. This order provides guidelines during the time the divorce is actually in progress. Alternately, you and your spouse can reach an agreement on temporary arrangements on your on or with the help of a mediator.
If there are no children, little property and a fairly pleasant relationship, the couple might consider doing their own divorce. There are books and kits to assist. Additionally, the services of a paralegal can be utilized to prepare the forms required.
However, if you have property to divide or children, the services of an attorney will be required. It isn’t necessary for the attorney to control every aspect of the divorce, since this can prove very costly. Some attorneys may agree to act as a consultant and provide advice concerning legal issues without being “retained”. This would require additional work on your part to file papers with the court and assure deadlines are managed.
Early Intervention Mediation:
Possibly, the most efficient method for dealing with substantial assets, assuming that the couple is fairly amicable, is to employ the CDFA to work with them and help them reach a settlement. The couple gathers many of the same documents that an attorney requires, while the CDFA helps them with their individual budgets.
After the initial meeting, they can work by email to exchange first drafts and discuss issues. It defuses the situation to have a neutral financial planner crunching the numbers. It’s often possible to come to an agreement in this manner.
If they don’t agree through this method, a meeting with the parties, an attorney mediator and the CDFA is arranged to work it out little by little in mediation. It usually takes from 4 to 8 hours.
Once both parties agree to an asset division, one of them hires an attorney (or both, if they wish), who will draw up the divorce decree and other needed legal documents. The other party may want an attorney to review the decree on their behalf.
If there are children, it may be best to have a mental health professional help them with their “parenting plan”, as recommended by state statute.
Note that this method avoids the tug-of-war of two attorneys.
There is a new approach to divorce in allowing parties and their attorneys to enter into agreements under the collaborative law approach. This can avoid lengthy litigation costs and antagonistic encounters. The parties and their attorneys agree to resolve conflicts through a series of settlement conferences. The attorneys may not serve as litigation counsel except to ask the court to approve the settlement agreement.
Both parties are required to complete a Sworn Inventory and Appraisement under oath. If one fails to disclose any asset, the other spouse can receive 100% of the undisclosed property. They can opt out of the collaborative law process at any time prior to signing the settlement agreement.
Neutral third parties, such as Certified Divorce Financial Analysts or Certified Public Accountants often contribute to the process with their expertise in the area of financial matters. Mediators may still be necessary when the parties cannot agree on a settlement.
If a Collaborative Divorce fails to reach a settlement, the parties must fire their attorneys and hire new ones to guide them through litigation. The parties must also fire any neutral third parties, known as “experts”.
If an agreement is close, but one or two items are holding up the final settlement agreement, a couple can employ the services of an arbitrator. The arbitrator is a judge who will listen to their testimony, review their case and issue a binding decision. Arbitration is much less expensive than a court battle and cases are usually decided very quickly.
If the couple is unable to reach an agreement through early mediation (cooperative divorce) or the Collaborative method, they will be engaged in “litigation”. This is the most common method of divorce. The attorneys use an assortment of tools, including court orders, “discovery”, interrogatories, depositions, subpoenas, and more. Attorneys rationalize that, just in case we end up in court, we will use every possible legal tool to prepare.
Depending on your attorney and your case, your attorneys will do some or all of the following: (Per Texas Rules of Civil Procedures):
Prepare for and attend hearings as necessary for Protective Orders,
Create and file Restraining Orders
Create and File Temporary Orders on child-related issues, use of house and car, spousal support, payment of bills.
Prepare and complete “discovery” (exchange of information)
Prepare Request for Documents,
Prepare Written Interrogatories,
File Depositions with the court,
Send Request for Disclosure to opposing attorney,
Send Requests for Admission,
File Sanctions with the court.
Exchange and file inventories with court.
Negotiate issues and come to agreement or Go to mediation.
If no agreement is reached, the trial normally occurs 9-12 months after filing, with much more work required by the attorneys.
Before the case can be taken to the courtroom, a mediation is required. If no settlement is reached in mediation, a court battle will entail two legal teams charging several hundred dollars per hour. There will be opening arguments, direct examination, cross examination, expert witnesses, closing arguments, court reporters, etc. This will cost many thousands of dollars and lead to further acrimony between the divorcing individuals.
Marital Settlement Agreement or Agreement Incident to Divorce (AID):
Property can be divided through the Marital Settlement Agreement prior to filing the petition, eliminating the necessity to list all marital assets in the Petition. If this is not accomplished, then the Settlement should be achieved before the Hearing in order to prevent the court from making these decisions.
You are not free to marry anyone else for 30 days after the judge orders your divorce.
Change of name:
If requested by either spouse, the judge will change the name of either spouse to any name they used before.
Dividing the Property and Debts:
One of the services an attorney offers is to review your assets to see what you own, your debts and how it can be divided. However, attorneys do not have special training in financial issues. A Certified Financial Planner specializing in divorce is better equipped to estimate real values and an equitable long-range solution to division of assets. Presented with the tables created by the planner, the attorney will readily be able to survey the marital holdings.
The proposed division of property is outlined in the decree. The attorneys, financial planners and spouses work toward an agreement before the date of the hearing. If this agreement isn’t reached, the judge will divide the property, largely influenced by the agreement presented to the court.
The division of property is rarely 50/50, since the earnings ability of each individual must be considered, as well as any separate property available. Additionally, one individual may be in poor health and require additional assets to maintain a decent standard of living.
A litigated case also uses the process of mediation, if the two attorneys do not bring about a settlement. Many jurisdictions require mediation before taking the case to trial. Unfortunately, after many months of wrangling and increasing bitterness, the mediation is a very stressful event. A mediator is a totally unbiased party who guides negotiations, prevents rancorous discussions and helps find a solution to the most difficult issues in settlement.
If the parties can agree, the mediator will draft a Mediated Settlement Agreement summarizing the agreement. This can then be given to the attorney to complete the divorce agreement.
Choosing an Attorney:
Do not employ a friend or relative or an attorney specializing in real estate or estate planning. Ideally, you should obtain an attorney referral from your Divorce Financial Analyst, since she has experience with numerous Houston attorneys. They should specialize in divorce. Do not hire the cheapest attorney available. The decisions are far too important to cut corners here. Never rely on your spouse’s attorney for advice, since there is an inherent conflict of interest involved.
Questions for a potential attorney:
How much of your practice is centered on divorce cases?
Will you handle the case personally or will your assistant do most work?
Will you go to court if we cannot reach an agreement?
How much do you charge per hour? Do you bill separately for secretarial services? In what increments do you bill (1/2 hour or ¼ hour minimum)?
How much is your “retainer”? Will you refund unused retainer if we end our relationship for some reason?
Will you act as a consultant by the hour rather than being “retained”?
Will you work with my Divorce Financial Analyst to coordinate my future planning with the division of assets?
If the attorney is “retained”, he will require payment up front. Once he has performed services to earn this amount, he will bill you for an additional advance. If you do not have funds to pay an attorney, the temporary orders of the judge may require that the spouse pay the attorney in your behalf.
Your attorney will no doubt depend on the services of a financial planner for complicated financial issues. Use a counselor to work through the emotional issues.
If you are on a tight budget, consider working through a mediator before involving attorneys; although this method doesn’t work for extremely litigious cases. You can substantially reduce the expenses through the early mediation method.
Control your own divorce:
Do not allow attorneys to take over control of your divorce, since decisions made now will affect your life for many years. Be involved in the process details.
If you are involved in mediation, do not allow your spouse to control the negotiations. Even if the spouse normally controls decisions in the marriage, overcome the urge to rely on his judgment. The decisions made will affect the rest of your life and should command your full attention.
Separating Emotions from Business:
Although it is understood that divorce is painful emotionally, try to separate the emotional upheaval from the business aspect. This will make it easier to make clear-headed decisions and work through negotiations. If emotions become overwhelming, call a friend or visit a counselor. A counselor can make the whole process much easier, assisting you in sorting through the emotions. Do not try to make important decisions when you are overcome with emotion. In order to have a business-like attitude:
Try to establish the most important items in your financial settlement, establishing others that can be conceded.
Do not withhold information from your spouse. This will increase expenses when the legal process of “discovery” is used to obtain data.
Don’t request needless information from your spouse to cause problems. He can return the gesture and consequently both of you will increase attorney fees.
Watch the clock when working with attorneys and other professionals, since hourly charges can mount up.
Avoid using your attorney to instigate battles or get revenge, since this will only serve to enrich the attorneys and cost you.
Dealing with emotions:
Give yourself time to heal. Find a safe place for you and your children and take your time about the details of the divorce. The temporary support order must be accomplished to provide living expenses, since money for necessities still comes from joint funds until the divorce is final. Take care of yourself through proper diet and exercise. Avoid isolation. Stay in touch with friends. Seek out divorce support groups to offer a venue for sharing feelings and meeting others going through a similar ordeal.
Keep a diary of conversations and work accomplished toward the divorce. Include the starting and ending time of conversations with attorneys, so that you will be able to discuss charges. Add a summary of each discussion. This will assist you in maintaining control and provide you with information in future encounters with professionals.
Dealing with the Spouse:
It is especially important to be business-like with the spouse, since emotions can interfere with negotiations. Don’t let old battles rekindle. Refuse to continue a meeting that degenerates into a battle.
While you want to be clear about what is important to you, try not to make your demands excessive.
Never use your children as a pawn to hurt the spouse or draw them into the litigation process. The children will suffer unnecessarily.
Even if you hold hopes of getting back together, don’t give away too much in negotiation. Doing so will only serve to impoverish you and not to patch up the marriage.
If you harbor guilt about the reasons for the divorce, don’t let this influence you to give away too much during the negotiations. This is your life and decisions made now will affect you for many years.
Spousal Maintenance or Alimony:
Texas passed a law granting spousal support (also called maintenance) in 1995. The guidelines were recently changed through legislation effective 9/1/11. Guidelines provide up to $5,000 per month or 20% of the wage-earner’s monthly gross income for a period of time dependent upon the number of years married.
Length of Marriage
Years of Maintenance
10 to 20 years
20 to 30 years
Over 30 years
These guidelines apply if you will not have sufficient property after the divorce for minimal living needs. If you are able to work, you may not qualify. Being caretaker of a disabled child can result in extending these guidelines.
If the wife cohabitates, this is reason to terminate support.
The support payments can be included as a deduction on the husband’s tax return, making them taxable to the wife. One is also eligible for maintenance if your spouse was convicted (or received deferred adjudication) of a “family violence offense” within two years of the divorce.