The Top 6 Serious Financial Mistakes Women Make During Their Divorce

When you took those vows 10, 20, 30 years ago you never dreamed it would come to this. You are now getting divorced and you feel like the rug has been pulled out from under you. All the plans you made for your future must now be rewritten. Your life is about to change and you have no idea how to even begin the process of divorce.

First, take heart. You are not alone, although it may feel that way. Over fifty percent of all first marriages end in divorce...so you are in the majority!

Second, take a deep breath and gather your thoughts. Try to put your emotions aside and think financially. Someone once said, "Marriage is all about love and divorce is all about money" and I couldn't agree more. Therefore your focus should now be about securing your (and your children's) financial future.

So don't throw up your arms and surrender just to get this over with. Instead, arm yourself. Understanding the following information could significantly increase your chances for a financially secure life, both now and in the future.

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Believing that an equitable division of property means a 50/50 split

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Equitable does not mean equal! Depending on the state, circumstances such as length of marriage and income and future earning capacity may be considered when property is split. For example, a 30 year-old woman with an advanced degree will probably rebound financially much faster than a 55 year-old homemaker that's been out of the workforce for decades. It is important to understand that you could be entitled to more, or less, than 50%, depending on the circumstances and choices made during the marriage.

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Equitable does not mean equal! Depending on the state, circumstances such as length of marriage and income and future earning capacity may be considered when property is split. For example, a 30 year-old woman with an advanced degree will probably rebound financially much faster than a 55 year-old homemaker that's been out of the workforce for decades. It is important to understand that you could be entitled to more, or less, than 50%, depending on the circumstances and choices made during the marriage.

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The bottom line is that you don't know what you don't know. Make sure you get the right professionals on your side as early as possible in your divorce. There are simply too many ways that you could harm your financial future and you might not even realize it until years later when it's far too late.

 

Follow Jeffrey A. Landers on Twitter: www.twitter.com/Bedrock_Divorce

Comments

[Divorcesmart101]

12:51 AM on 02/24/2011

You are entitled to 50% of the value of your spouse's Retirement Fund or Retirement Annuity on the date of your divorce order if you are married Ante Nuptial Contract (ANC )with accrual. Ensure that
your settlement agreement states that you receive 50% of the gross amount, as you are liable for
the tax. The name of the Fund and the Policy Number or Member Number must be stipulated in your settlement agreement. Make sure that you get the full value of your spouse's contribution, as well as the company's. Your spouse’s employer may have a Provident Fund AND a Pension Fund. If so, claim your 50% from both funds. Also look at www.divorcesmart101.com

[Jeffrey A. Landers]

06:20 PM on 02/28/2011

I believe your comment is applicable in South Africa and not the U.S.

[Jeffrey A. Landers]

10:48 AM on 02/23/2011

There are NO do-overs in Divorce, unfortunately! Although alimony and child support payments can possibly be modified (not easily), you will have to live with whatever asset/property division you agreed to in your divorce settlement agreement. That's why it's so critically important that you get it right from the get-go. Most people have no idea how to analyze the short and long-term financial and tax implications of their divorce settlement (including most divorce attorneys - they just don't teach that in law school!!). So don't beat yourself up! Why would you know how to do this? This is not something that is taught in school or that most people have any experience with (this is true regardless of intelligence, education or profession - most of our clients are lawyers, doctors, business owners, executives, MBAs, etc.). For those of you who are currently going through a divorce and have significant assets, you should seriously consider hiring a divorce financial planner (such as one of our Divorce Financial Strategists™ at Bedrock Divorce Advisors) to work in conjunction with your divorce attorney. If you are already divorced, your goal should be to ensure that your divorce settlement will last as long as possible. Once again, you should only work with a divorce financial advisor/planner that specializes in post-divorce budgeting, retirement planning and other investments.

[kidrooms]

08:53 PM on 02/22/2011

I would soooooo love to do a redo of the last three years...I naively thought that a amicable divorce was best for my children, so didn't fight for what I deserved and what they deserved. Although he pays child support, it's far less than what I've had to pony up for all the other day to day things that come up in teens' lives...I'm so tired of being broke, and too broke to really do anything about it legally. I want a do over!!!!

[Deborah Moskovitch]

09:17 PM on 02/21/2011

You make a lot of excellent points, and I also discuss these same thoughts with my clients in my divorce consulting practice. Another consideration many women need to think about is developing their own credit rating. There are spouses who are uninformed when it comes to their finances. It is imperative that the non-informed spouse begins to get involved in finances, understand the monthly budget, and so much more. Working with the right financial professional goes a long way to being much smarter about managing your divorce process. For more helpful tips, you might consider reading The Smart Divorce (Chicago Review Press, 2007) by Deborah Moskovitch. Also, we will be discussing the finances of divorce with Jeff very soon on The Smart Divorce on Divorce Source Radio on divorcesourceradio.com. Tune in for some very helpful advice from the leading professionals across North America.

[groovelady]

04:30 PM on 02/21/2011

I made a major mistake--I made the entire downpayment for our house before my ex-husband and I married--he convinced me that he should be on the title because he had a slightly higher credit score--I was skeptical, but went through with it because he said no one would ever contest my right to the house--well, we got divorced 9 years later, and my lawyer said I was NOT entitled to get my downpayment (separate property) out of the house ($58,000!!!) because my name was only later on the title to the house...and furthermore my ex got an additional 26k out of the house sale because I had intellectual property I wanted to protect. I was pretty dumb. I will never make that mistake again. On top of it, he dragged his feet to pay child support, expects me to pay for all his travel to see the kids and refuses to pay a cent of our kids' preschool tuition. And I make half of what he makes! Never again!

[susan orlins]

10:03 PM on 02/20/2011

Wow great post with such helpful specific info. I thought I'd thought of it all, including frequent flier miles. Years later I still worry about what I left out of the agreement. I worry about a lot of things though, especially on my blog, www.confessionsofaworrywart.com

[WendyLu]

08:13 AM on 02/20/2011

I wish I had known all this info when I was divorced more than 5 years ago after more than 27 years of marriage. My hubby fell in love with a young girt & wanted a divorce; nothing would change his mind. It all happened so quick that I was in a state of shock & unfortunately, we lived 100 miles away from the nearest lawyer & couldn't afford one anyway. I didn't know anyone I could turn to for advice. I receive a certain percentage of his military retirement pay every month. The alimony lasts only 5 years & ends next month. If my ex dies before me, I lose the much-needed retirement check--but I did not think of that at the time, I was living in a fog for months over what had happened. It never occured to me to have a life insurance policy taken out in his name as part of the settlement & I really regret it because that retirement check is all that is standing between barely surviving & being a bag lady. It's too late for me now but I hope your excellent advice isn't too late for anyone else. Being ignorant about the financial implications of a divorce has cost me in more ways than one.;

[rockgod]

11:38 PM on 02/20/2011

Get over it and get out there and work! You got a free ride for five years.. sheeesh!

[WendyLu]

07:05 AM on 02/21/2011

Rockgod--I haven't been sitting on my butt; I have a degree & have working off & on & attending college since 1994. I have NEVER gotten a "free ride!" But I was in food service & had to quit in 2009 as I have osteoarthritis in my back & both knees & it's now gotten to the point where I can barely walk. I am currently in my last semester of a technical community college going for an A.A. in Applied Science (Office Administration) so I can transfer to "sit-down" work. I can't get a grant & have been turned down for scholarships, so my church has been supporting me, paying my tuition & whatever bills I give them (my mortage is covered by my VA check & my car payments/gas by alimony) as long as I do volunteer work--which I've been doing for 2 years--and am still doing it. Besides 5 classes this semester, I'm in 2-credit Co-op class, working 24 hours a week (volunteer) in the HR dept. of a non-profit organization. I have not been sitting around since my divorce, collecting money & refusing to work--I've done nothing but work and/or attend college for the last 15 years, & with my current health problems (& no insurance until I'm lucky enough to find a job). it hasn't been easy for me, but I'm hanging in there!

[Jeffrey A. Landers]

02:21 PM on 02/21/2011

Several divorced celebrity women might help us with a Non-Profit that would benefit women like you who do not have the financial means to hire a top-notch attorney to protect their legal rights and a Divorce Financial Strategy firm like my company, Bedrock Divorce Advisors, to protect their financial future.

It is unfortunate that so many women end up near or below the poverty level after divorce and we hope that we can do something to help change that.

[DanSc]

07:29 PM on 02/19/2011

We want prenup!

[BrancatoNY]

10:14 AM on 02/19/2011

One of the most important things to take care of when you are getting divorced are your insurances. Getting a divorce is kind of like leaving a job. If you've been dependent on a spouse, you need to have portable health care, of course. Each of you will need life insurances adequate enough to protect your family and ensure the continuation of any income stream -- or responsibility you must pay or will receive. Much overlooked are umbrella liability and long term care insurances to protect your assets and income going forward. In the case of second marriages, a pre-nuptual insurance review is a must. Pre-nuptual agreements do not prevent Medicaid from spending down your assets so your spouse may qualify for benefits. There are other fine points to consider... your lawyer may not know, so get an insurance expert to help. Paula Brancato Nemec Financial [e-mail]

[TaoJonz]

08:16 PM on 02/18/2011

This is a great article, and wise advice. Don't forget Second Saturday divorce workshop for women...March 12, we'll be covering these issues in detail!

[katieandtom]

03:24 PM on 02/18/2011

well i certainly made financial mistakes, but asssuming i receive the settlement that we agreed to, ill be fine. a life without him is worth every dime that he is gaining in this divorce.

[Jeffrey A. Landers]

04:04 PM on 02/18/2011

Your post-divorce financial planning is every bit as important as your pre-divorce financial planning. Now your goal should be to make that divorce settlement last as long as possible through realistic budgeting, retirement planning, investments, college savings (if you have young children), etc. You need to speak with a divorce financial advisor about both your financial and your life goals, so that they can help you accomplish both. In addition, a good advisor will help guide you through all the things that you need to do post-divorce, from changing your will to finding health insurance, etc.

Best wishes for your new life journey!

[Erinaleks]

01:19 PM on 02/18/2011

I'll keep writing this don't get married in the first place all these experts would be out of jobs and blogs if no one got married. Why give your life over to the state. No one is worth the risk.

[Kalie]

03:17 PM on 02/18/2011

Angry much? Love is what makes the world go round:)

[Erinaleks]

09:25 AM on 02/19/2011

Lol. Angry???? What giving the state power
Over your life is the intelligent thing to do?
Anyone who has been divorced has had an
Eye popping experience with the judicial system.
Forget truth and justice and the Constitution and
Bill of Rights. Sounds like you are projecting
Your own anger. I was married and familiar with
This primitive form of psychological defense. Then
Again you are female and may of benefitted from
The bias in family court. Lmao!!!

[PaulaWoolley]

01:01 PM on 02/18/2011

You bring up some really good points here. So many women want to keep the house in a divorce, but now I see how that could be a really big mistake!

[Greg Albright]

12:49 PM on 02/18/2011

Wow this article missed the big one...

If you can't afford the house after the divorce you don't get to keep it. Like virtually every divorcee I know made this mistake, and many here on Huffpo are bitter because they though he would continue to pay for the house after the divorce. But almost invariably the house is lost in a divorce, and you don't get to keep it if you can't finance it.

[Jeffrey A. Landers]

01:43 PM on 02/18/2011

Although women often would like to keep the house in a divorce, it may or may not make financial sense to do so. Slide # 5 gives a very brief example of that. However, it is critically important that you do not take a piecemeal approach and view each asset in isolation. You need to holistically look at all the assets (and liabilities) - the house, retirement plans, bank and brokerage accounts, businesses, income and expenses, etc. and project what your financial needs will be for many years in the future. Otherwise there is no way to know what you can or cannot afford. Getting the house and realizing a few years later that you can't afford it could be disastrous. Just as you need a divorce attorney to understand your legal rights and remedies, you also need a divorce financial planner so that you can fully understand your current and future financial situation.