by Chris Elkins
Published: May 20,2002
How would you like for your divorce to make headlines and have everyone speculate about the cause of the breakup? It’s bad enough to go through the ripping apart of a family, much less having to do it in the public eye. The end of a marriage is gut wrenching when you find yourself on the opposite side of that one person you promised to stand firm with through thick or thin till death do you part.
I’ve never experienced divorce, but I’ve worked with many women who have, and the stories have many similarities. For most, they never saw it coming. Despite their difficulties, despite the foreshadowings, they believed it could not happen to them. They are shell-shocked, and it is this numbing reaction that keeps them from protecting themselves. I hear lines like “He’ll come back” or “He’ll come to his senses.” Denial hangs over them like a thick fog.
The women who navigate this passage well are those who either come to grips with reality quickly or who allow their survival instincts to drive them. And it is a game of survival, for, after divorce, women tend to live at lower levels than their ex-husbands. They are usually left with the children and with fewer prospects for earning a decent living.
While the emotional toll of divorce cannot be measured, the financial effects are clear. Dividing marital assets and arranging for a suitable settlement should be based on sound monetary principles, not on sentimentality or lust for revenge.
Savings accounts, investment accounts, profit sharing accounts, etc., are fairly easy to divide. Pick a valuation date and split these accordingly. With investment accounts, you may want to divide the actual shares, such that one person receives 50 shares of GM, and the other receives the other 50 shares. With most profit sharing accounts, the spouse usually asks for cash to be rolled to an IRA account.
One area that tends to hang up many women is the ownership of the family home. Hanging on to the house may seem like a good deal, but you may need more liquid assets. Most women need to make sure they are left with enough cash to cover the transition and emergencies. Remember, you can’t just sell your house overnight (like stocks or bonds) when you need the extra money. And the house is not just an asset… it’s the place you live. You may be “married” to that big house, but can you afford the upkeep in mortgage payments and maintenance? It may be better to sell the house, split the proceeds, and purchase something smaller. I know this means uprooting the children, but you must look out for future needs.
Within any marriage, there may be assets that are difficult to measure. How do you put a value on your spouse’s business that you helped to build? In this case, you may want to call in an expert with appraisal experience in that particular type of business. Future benefits should not be forgotten. Pension plans that are structured for monthly payments upon retirement must be factored into the equation. For many people, this may be the most valuable asset of the marriage. A spouse may have a right to a portion of this retirement income stream.
Stock options are another cloudy area, since current value is very different from future value. Make sure these are included in the settlement, and consult an expert for valuation. Don’t forget other assets with future benefits, such as timber land or business partnerships. A fair settlement depends on a full and accurate accounting of all marital assets.
For spouses who have not worked or had secondary jobs, insurance may be a problem. While health insurance for children is usually covered under the full-time spouse’s benefits, health, disability and life insurance for the ex-spouse is an extra expense. Don’t forget to include this when looking at monthly income requirements.
The financial side of a divorce should be cut and dry. Make sure your attorney has plenty of experience in this area, and get other experts to help as needed. But don’t just sit back and expect everything to come out rosey. Get involved. Get educated. Get yourself together long enough to protect your own interests and those of your children. You will have plenty of time later on to feel the emotional effects of this trauma.
Many times, I’ve sat across from women going through divorce. The intense pain is sometimes too much for me to bear. More than once, when asked about my history and the death of my first husband, I’ve heard these words, “You’re lucky he died before he could leave you.”
I know there is truth in these words. I didn’t have to divide the assets. I didn’t have to move out of my home. I got everything that was left, and no one chose to leave me. And I won’t run into him in the grocery store with his new wife.
‘Til death do you part looks like a pretty good deal to me.
Nancy Lottridge Anderson, CFA, is president of New Perspectives Inc. in Clinton. Her e-mail address is firstname.lastname@example.org, and she’s online at www.newper.com. This column first ran in the July 2-8, 2001 issue of the Mississippi Business Journal.
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