The Institute for Divorce Financial Analysts reports that about $50 billion a year is spent in North America as a direct result of divorce. Divorces can range from simple to complex, but saving money largely revolves around two strategies: (1) paying less to your lawyer and (2) paying less to Uncle Sam.
The following suggestions can help you avoid wasting money as you go through the divorce process:
- Cooperate. This is far easier said than done because feelings of bitterness and distrust are common, but most wasted money stems from emotional decisions and contentious divorces. Your divorce will be very expensive if you need lawyers to help determine who gets the big-screen TV and flatware.
- Trim the lawyer bills. It’s reasonable that price be one factor in choosing a lawyer, especially if the divorce is unlikely to end up in a court battle. Once you hire a lawyer, use him or her sparingly. An attorney should handle court paperwork and lay out your legal rights, duties and options.
- Be prepared. Write down questions for your attorney meetings to make efficient use of your time. Remember, any drawn-out conversations will be billed at the hourly rate of maybe $250 an hour or more. When minor developments happen, don’t call your lawyer each time. Instead, keep a journal and update your lawyer periodically.
- Use other professionals. Your lawyer is for legal stuff. If you need a therapist, get one. If you need a financial planner, get one. Either will be far better at giving you what you need and far cheaper than billable attorney time.
- Use free resources. Library shelves are full of books on divorce, and the Internet has a slew of Web sites. A helpful one is operated by Lee Borden at www.divorceinfo.com. A new inexpensive book is "The IDFA Divorce Survival Guide," written by two leaders of the Institute for Divorce Financial Analysts.
- Tax considerations. The old joke is there are three parties to a divorce: the husband, the wife and the Internal Revenue Service. Cooperating spouses can structure a divorce to pay as little tax as possible, but you might need help from a tax pro. The way you split up stocks that have appreciated by different amounts could have big capital gains tax consequence. It may not be an easy decision on who receives the child tax deduction and head-of-household tax filing status. You even may try to time your divorce to happen late in the calendar year or early in the next year, depending on the tax impact of filing jointly or as singles. And it’s important to know that structuring payments as child support or alimony can have a big tax impact.
- Don’t rebound. People who have been in a stagnant marriage sometimes go wild with money, dating every night and spending money frivolously.
SOURCE FOR POST: South Carolina Family Law Blog