So you're getting divorced, and want to make sure you get your fair share. According to financial planner Nancy Liebman of Liebman Associates, the first step to protecting yourself is to become the CEO of your divorce.
"You need to hire a team of experts to guide your decision process," she said. "This means finding a mediator or lawyer, a good therapist, and especially a financial adviser."
Liebman recommends people going through a divorce get a Certified Divorce Financial Analyst (CDFA)—financial planners and accountants who have completed the Institute of Divorce Financial Analysts training. A list can be found online at http://www.institutedfa.com.
"The hardest thing is to have to support yourself on a fixed income in a situation where you might not have been the one handling the financial issues," Liebman said. "It's a reality check. … That reality is hard to accept sometimes. You won't be able to afford what you had when you were married."
If you aren't sure you can afford to hire professional advisers, Liebman recommends starting at a local library for free seminars or other resources.
"In the Chicago area, there is a wonderful resource called the Lilac Tree," she said. "They provide referrals, and have seminars and groups where they can help you get some of the basic information."
Liebman said many people lose financially if they are emotionally attached to the things acquired during the marriage.
"We see people wanting to keep the house no matter what, but more often than not, it doesn't make financial sense," she said. "And don't forget that whatever maintenance or alimony you agree to, you have to pay taxes on this. You might think you have a good package because you're looking at the amount before taxes. Once you take out the taxes, that package might not seem so great."
Here are some of Liebman's tips for making sure you get your fair share.
Protect your joint checking account. "If the spouse spends money that is not for the marriage—but it's coming out of the joint account—you want to keep track of that. There are ways to negotiate. Try to get half of what was spent so you can offset that. You could also get an injunction that says both people have to sign a statement in order to draw money out of this account. You will need a lawyer, but do this. Then get your own bank account, credit card and copies of all credit card and bank statements."
Get life insurance. "Have life insurance on the individual who is paying the maintenance, so if they die, you will still get the maintenance. Otherwise that will disappear … and it's really hard to do after the fact."
Try mediation. "Mediation can save you a lot of money. You have to be able to sit down in the same room as your spouse and be able to talk about this, which is not something everyone can do."
Consider all your assets. "Things like miles for flying, your cars, a boat, time share, rewards, paid vacation, sporting event season tickets, theater tickets—that all has value."
Ask to see the tax returns. "If you think there have been misrepresentations from income taxes, talk to your lawyer about the Innocent Spouse Relief rules. These can protect you when a spouse incorrectly reports items on a jointly filed tax return."
Go cash-only for a month. "You should keep a log for a month of everything you spend. Don't forget lifestyle expenses. If you are charging things that you can't pay off at the end of the month, then you know you are acquiring more debt. Without the joint checking account to pay this off, you need to remember that on your own, this will be your responsibility."
If you say "I do" again, get a prenuptial agreement. "It's very unromantic but many do have assets going into a marriage because they've waited [until] later in life. … Marriage is a business as much as a romantic relationship and you need to be educated and informed. The idea is to empower people and to make them realize they can take control of their life and make decisions."
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