Divorce Can Cost You Over And Over

Divorce Can Cost You Over And Over

Published: Wednesday, 4 May 2011 | 9:45 AM ET

By: Elizabeth Alterman, Special to CNBC.com

When most couples say “I do” they never imagine that their happily-ever-after could turn into a disaster that could end up costing a lot more than just heartbreak. For those potentially parting ways, there are some important pecuniary points to ponder.

Noel Hendrickson | Getty Images


Litigate or Mediate?

“The actual costs of the divorce generally surprise most people,” says Brette Sember, family attorney and author of two books on the subject. The Divorce Handbook and The Divorce Organizer and Planner. “They don’t have enough for the retainer for the attorney and are surprised by the amounts of the bills thereafter. I highly recommend considering mediation since it is a very cost effective way to resolve your divorce.”

When couples pursue traditional litigation, two attorneys are paid to negotiate and then, possibly, go to trial. In mediation, a neutral third party works through decisions with the couple.

“You can plan on mediation costing somewhere between a few thousand and $7,000, whereas if you litigate, you could spend $50,000,” says Sember

Victoria Di Santo, of Berkeley Heights, NJ, says she and her ex-husband were able to keep costs to a minimum by doing a lot of careful planning before visiting their mediator.

“By going in prepared and having discussed how everything would be divided, we were able to keep our visits to a minimum and at $350 an hour, that’s huge,” says Di Santo. “I’ve had lawyers tell me that they’ve seen couples rack up $3,000 in legal fees because they spend their time in the lawyer’s office fighting over a $1,500 living room set. If you can take a practical approach, remove the emotions and try to think of it as a business transaction, you’ll save a lot of time energy and money.”

House Or Home

For most couples, the biggest asset they own jointly is a home. In most cases, either one person leaves or the property is sold to pay for new housing. That alone can make a big difference.

Should all divorces be settled with a 50/50 spilt of assets?

Yes

No

Unsure

“When you’re married, there’s one pot of money that pays for all your household expenses,” says Sember. “When you divorce, the pot of money stays the same but suddenly must support two households. It is difficult or impossible to maintain your standard of living.”

Two homes. Two cars. Twice as many utility bills.

For those who can’t afford to maintain two residences, a new, albeit uncomfortable situation has arisen in which divorced couples are living together rather than suffer additional financial hardships.

Linda E. Cole, author of “Living Together in Divorce”, found so many couples forced into this predicament that she started the blog “Separated But Living Together. A New Trend for the 21st Century.”

“A young couple with children wanting to divorce may not have the money to pay for it,” says Cole. “An average divorce in the [U.S.] can be around $15,000 and if you add to that the expense of a partner moving into a new residence, it is not surprising couples continue to live together.”

Cole adds that the slow recovery in the housing market is another reason couples can be divorced and living in the same house.

“The sale of it [the house] could bring, for many, more independence in their single future. Houses are not selling well in most parts of the world and this is slowing down a lot of divorces. On top of that a house may no longer be worth the amount a couple paid for it. Rather than sell it for less a lot of separated and divorced couples figure it is smarter to live in the same house and hold out for things to improve,” she says.

Education & Health

That family house is often used as a source for college funds.

Sember acknowledges that few people discuss how to pay for college when they have young children.

Di Santo said she and her former husband were careful to avoid that mistake and agreed to put away an equal amount each month for their daughter’s college tuition, even though it was still more than 15 years in the future.

There are also expensive necessities, like health care.

Prior to the Patient Protection and Affordable Care Act, also known as the Health Care Reform Bill, signed into law March 23, 2010, many spouses who were dependent on their partner for healthcare coverage found themselves scrambling to find private health insurance following a divorce. While COBRA (Consolidate Omnibus Budget Reconciliation Act) is an option, it is usually very expensive and is only available for 36 months after the divorce is final.

Spouses with pre-existing conditions often have a very difficult time getting insured and if they do, costs can be exorbitant. The bill provides immediate access to insurance for those who are uninsured because of a pre-existing condition through a temporary high-risk pool, making healthcare coverage less of an issue in terms of divorce.

Another area of contention is who is going to pay for the healthcare of adult children of divorcees, who find themselves unemployed, back at home and uninsured. Effective September 2010, the PPACA requires that group health or individual plans continue to provide dependent coverage until 26 years of age, making it a bit less pricey for parents who are divvying up the costs of co-parenting.

Small Change, Big Changes

Many couples are so focused on the obvious big-ticket items, they often forget about some of the smaller possessions they accumulated together in happier times. Things such as artwork, antiques, club memberships, season tickets and frequent flier miles are all considered marital property.

What is your biggest money worry?

Retirement funds

College funds

House resale value

None of the above

Hidden costs abound when it comes to divorce and can devour previous dollars. One little-discussed but very real expense is the cost of getting the children to and from each parent in shared custody situations.

“Make sure you document who is doing the dropping off and picking up,” says Di Santo, who drives a seven-passenger Ford Escape, and noted that with gas prices tipping $4 per gallon, the cost of shuttling children back and forth adds up quickly.

Other covert costs include counseling for spouses as well as children and the additional expense of extended day care, should parents needs to increase their work days to make ends meet.

Exit Plan 

Coming up with a post-divorce financial plan is key. For some, a one-time settlement may have to last the rest of their lives. It is important to come up with a plan to figure out how to cut expenses while making the most of those resources.

Violet Woodhouse, a California-based family law attorney and author of “Divorce and Money”, says divorce is really about managing risk both in terms of handling income from spousal or child support as well as dividing a portfolio of investments.

“When we have child or spousal support, these are very flimsy forms of income, because they can change,” says Woodhouse. “They end at death and yet the need for that income doesn’t change. The other part of that is disability because one can become disabled and in fact, the younger you are, you are more at risk for becoming disabled than you are for dying.”

Woodhouse advises those dependent on these forms of revenue to shift that risk to an insurance company by purchasing life insurance and loss of income or disability insurance.

“Very often when people are awarded spousal or child support, they’re not planning for when that ends—if they’re awarded a stream of income on a monthly basis, if they do not set aside funds that will be there to draw on when that resource ends,” Woodhouse said.

Stocks, bonds and mutual funds should not just be divided by default, cautions Wall. Even if the instruments might be valued equally, one party is usually less tolerant for risk and that should be taken into account when pulling apart a portfolio. Likewise, if one investment has a gain, while another has had a loss that should be distributed according to which party can best manage the tax consequences.

By going into divorce with eyes wide open, recognizing the costs and potential financial challenges that can occur, spouses can make smart financial decisions about how to proceed and plan for their single futures.

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The Benefits of Divorce Mediation

The Benefits of Divorce Mediation

How the mediation process can diffuse the conflict and improve communication in your divorce.  by Judge Michele F. Lowrance

There is a worldwide epidemic of divorce. The world rate is 50% — and it’s even higher for second marriages in the United States. Couples often experience divorce as a required nightmare and fear that it will leave an indelible stamp. When the first moment crashes in on you, and you know divorce is inevitable, you inevitably feel lost and frightened. Sure, you have heard rumblings about mediation, but you ask yourself, “Isn’t that a little risky? Couldn’t I lose some strategic edge?” Or, “I never could communicate with him/her; why should I think I could do that now?” From the bench, as I witness the anguish of the litigants, I always ask myself: why in the world didn’t they consider mediation?

It is not hard to spot someone going through a divorce. The pent-up emotion is easy to observe: they appear to be splitting at the seams. But the adversarial court system was not built to house these emotions, and divorce attorneys are not trained to reduce this kind of suffering. Yet people justifiably expect this kind of relief from the divorce lawyers, and the courts and are frustrated and disillusioned when their agony seems endless. But there is hope, and relief is available through mediation and Alternative Dispute Resolution.

Mediators are specially trained to diffuse highly charged controversy where they can soften calcified emotions and remove blocks to agreement. In the adversarial process, family-law attorneys must enhance disagreements and positioning as they continually repeat them to each other and then cultivate them for court. Mediation encourages emotional expression in ways that are productive; in the adversarial process, the only avenue for this kind of expression is usually anger. Communication often freezes between the parties as they battle through their attorneys’ voices and become afraid that they may say the wrong thing. Without communication, no one has an opportunity to explain themselves or their reasoning or even to apologize or admit that they may be wrong. Mediation encourages ongoing communication, because they know as I do breakdown in communication is the first step toward disaster.

It appears that the court system rewards blame and accusation. There is a misperception that a trial might validate your position and give you relief and closure. The best closure you can get is the one you craft for yourself, not the one I create from only a snapshot of your life. The mediation process allows you to be the architect of your life and that of your family going forward. You will have learned a new language of compromise and how to navigate adversity with your former spouse. The trickle-down benefit to the children is immense. The children observe their parents skillfully deal with each other, even if they didn’t before. They learn that conflict is part of life and doesn’t mean they are going to lose a parent. In choosing mediation, you will endorse a positive, often benevolent, process rather than fusing your future to a potentially destructive life experience.


Judge Michele F. Lowrance has been a domestic-relations judge in Illinois for more than 13 years. She wrote Visitation Guidelines for Cook County and produced and chaired the state-wide judicial conference, “How to Tell if People Are Lying”. She has made numerous TV and radio appearances and produced and hosted a talk-radio show. She is a regular guest lecturer at Chicago Divorce University, the Chicago Bar Association, the University of Chicago, and Northwestern University.


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Effects of Divorce on Children

The Effects Of Divorce On Childrenby Lesley Foulkes-Jamison, Ph.D., Private Practice, South Carolina

When parents decide to divorce or separate, their child or children are faced with multiple stressors. Just knowing that things are going to be different after a divorce, but not knowing exactly how can be frightening for most children. Children from divorced families have to learn to cope with the many changes in their family. The amount of contact with one parent, often their father, will be reduced. Children may have to move from their family home or change schools. They may have a decreased standard of living. They may have to live in two homes. They may have more responsibility placed on them. The custodial parent may be physically and psychologically less available for children due to increased demands. Often, children initially focus on these immediate negative effects of the family breaking up, and do not find comfort in knowing that other families that have divorced eventually do okay.

Adjustment to divorce can take up to two years or even longer. Many children will adjust to their parents’ divorce, but some will continue to have significant problems into adulthood. Parents’ sensitivity to their child’s needs is one of the most important factors in facilitating adjustment. Other factors such as the child’s age, gender and temperament will also influence how well the child adjusts.

A preschooler’s reaction to and ability to understand their parents’ divorce will be very different from that of an adolescent. A child’s beliefs about divorce will change over time due to their cognitive maturity and evolving relationships with their parents. Awareness and sensitivity to the developmental differences in children’s reaction to divorce can provide parents with insight in how to talk to their children to help in their adjustment.

Because of their limited cognitive abilities, preschoolers are often baffled by their parents divorce. They lack the coping skills necessary to deal with all the changes associated with divorce, which place them at risk of having more adjustment problems than an older child. Children tend to be egocentric at this age, and will often blame themselves for the divorce. They may feel that it is their responsibility to bring their parents back together.

Preschoolers tend to be “emotionally needy,” have fears related to abandonment, and may display acting-out behaviors following their parents’ divorce or separation. Preschoolers are likely to become very distressed during visit exchanges.

Although children between the ages of about 6 to 8 continue to have fantasies about reconciling their parents, they are less likely to blame themselves for the divorce. Children at this age have been found to experience intense grief over the loss of not having one of their parents living with them. The older child (ages 9 to 12) is better able to understand their parents’ divorce. They are likely to consciously express their disapproval and tend to take the side of one of their parents. Anger at their parents is conscious.

Adolescents’ ability to understand and conceptualize their parents’ divorce will enhance their adjustment. However, they are faced with the task of integrating the divorce experience with their own developing identities.

Boys and girls tend to react differently to their parents’ divorce. As a rule, girls tend to become anxious and withdrawn, while boys tend to become more aggressive and disobedient. Girls from divorced families may become sexually active earlier than girls from intact families. Interestingly, boys often adjust better when their mothers remarry, while girls have more difficulty.

Children of divorced families tend to have long-term adjustment difficulties when there is ongoing conflict between their parents. Boys, in particular, are likely to display marked behavior problems when this exists. Children’s adjustment is also determined by the amount of conflict the parents had before the divorce.

Researchers have found that children in divorced families, where there is little conflict following the divorce, do not differ in adjustment than children from low conflict intact families.  A child’s relationship with his or her parents following a divorce is critical to the child’s adjustment. Although the distress of not being with both parents is one of the most painful parts of divorce, it is the continuing relationship that children have with their parents that is essential to their long term adjustment. This highlights the importance of not criticizing the other parent in front of the child.

Children from divorced families do best when visits from the non-custodial parent are regular, predictable, and occur in a “conflict-free” setting. The quality of the relationship is more important than the quantity. If frequent contact occurs in undesirable circumstances, the child is likely to have adjustment problems.  A child’s adjustment is facilitated if the custodial parent is warm, understanding, nurturing, and demonstrates good parenting skills.

If the child’s parents have difficulty coping with stress, the child’s adjustment will be at risk, especially if the child has a ‘difficult’ temperament. A child with such a temperament will have significant problems coping when faced with disruptions in routine and when their parents experience increased stress and demands. These children may become more difficult to manage after the divorce. A child’s adjustment to divorce will be quicker when fewer disruptions are caused by the divorce and when an established routine is achieved.  Unfortunately, a practical change that often happens with divorce is a reduction in standard of living. This may cause the custodial parent to be overwhelmed, and unable to meet the needs of the child.

In summary, in thinking about the effects of divorce on children it is important to consider factors that facilitate the child’s adjustment or makes them vulnerable to the negative effects of divorce. Some things that you can do to enhance a child’s adjustment are the following

(1) Prior to the separation, both parents should discuss the impending divorce at an age appropriate level w/each child;                                 

(2) Be available to answer questions;

(3) Read age appropriate books on divorce with your child;

(4) Reassure the child divorce is not his or her fault;

(5) Let the child know that you will both continue to love him;

(6) Put child’s needs first;

(7) Do not argue with other parent in front of child;

(8) Do not expect your child to meet your emotional needs;

(9) Be consistent in your parenting;

(10) Make visitations regular and predictable;

(11) Do not be openly critical of other parent;

(12) Do not interrogate a child about visits with other parent

(13) Most importantly be sensitive to your child’s emotional needs.

Originally submitted 1/1/2001 and previously published in Gainesville Family MagazineAll Rights Reserved: Clinical Psychology Associates of North Central Florida, P.A.,  Gainesville and Ocala, FL
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10 Commandments for Divorced Parents

Sometimes in the turmoil and emotional pain of divorce, couples often make unintentional mistakes with communicating and interacting with their children.  Below is a useful list of the TOP 10 RULES TO FOLLOW when helping your children through divorce.

For more useful information go to www.MediationAndCounselingConsultants.com

TEN COMMANDMENTS FOR DIVORCED PARENTS

  1. Thou shalt not speak ill of or criticize one’s former spouse or in-laws to the child or around the child so the child may overhear it.
  1. Thou shalt not in any way create situations where the child feels he or she must choose one parent over the other.
  1. Thou shall not communicate anything about completed or pending court proceedings to the children. Such issues as child support are adult matters not intended for children.
  1. Thou shalt not in any way directly or indirectly interfere with legal visitation with the other parent.
  1. Thou shalt not argue with the former spouse in front of the children, or in circumstances where they may overhear the argument.
  1. Thou shalt not interrogate the children after a visit to learn of the ex’s negligence or poor judgment. If a child is reluctant to answer questions, respect this reluctance. The child should not be used as a spy to collect information on the ex’s living habits.
  1. Thou shalt respect the fact that all children instinctively desire to love their parents, regardless of their faults and shortcomings. The child’s love of a flawed parent does not mean he or she loves you any less. Thus, thou shalt try not to artificially limit, restrict, or interfere with the child’s relationship and love for his or her other parent.
  1. Thou shalt not use the children as messengers. If you feel you cannot talk directly to your ex-spouse, send him or her a letter.
  1. Thou shalt not use your children as substitute friends or confidants.
  1. Thou shalt not use the children as pawns in a power struggle with one’s ex-spouse, or to punish one’s former mate.
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