Guide to Divorce
You know your marriage is over - and now you have a daunting legal process ahead of you. Deciding who gets what can be a challenge, even under the most amicable of situations.
Going through the most dramatic romantic split that can happen is hard enough. When you add the complexity of dealing with an asset like a structured settlement, a divorce can become even more overwhelming.
With a number of careful decisions, it can be a chapter of your life with significantly less negative repercussions. With planning and help your divorce can be a chapter that closes.
- Written By Rachel Christian
Writer & Researcher
Rachel Christian is a Certified Educator in Personal Finance with FinCert, a division of the Institute for Financial Literacy. She is committed to promoting financial literacy and making complex financial topics accessible to readers from all walks of life.Read More
- Reviewed By Roger Wohlner
- Updated: May 8, 2023
Step One: Getting the Help You Need
It’s natural to want it all to be over with quickly, but it’s not worth sacrificing your future financial security for speed.
Still, you don’t have to go through it alone. Get the legal and emotional support you need as soon as it becomes clear that a divorce is imminent.
Finding a Divorce Lawyer or Mediator That Understands Settlements
Divorce is a legal process and getting an expert’s opinion makes sure you’re doing it right. Unfortunately, some make the mistake of hesitating to hire someone until it’s too late. Finding a divorce attorney or mediator doesn’t mean you’re greedy or after your soon-to-be ex-spouses money. It simply means you’re getting someone to think logically and prudently during a very emotional time.
The internet is a great resource for starting your search for a lawyer. A quick search engine visit can show you many lawyers in the area. Board certifications are a plus if you know your case is special. For instance, if you have several types of assets to split or cash out, you may want a specialist.
Once you have a few in mind that you’re interested in, start scheduling consultations. Face-to-face meetings are a way to see if you will feel comfortable with this person. The right lawyer or mediator should make you feel at-ease. It’s important to remember that a divorce is uncomfortable enough without dealing with someone you don’t mesh well with.
Talking About Your Divorce
Telling those close to you what you’re going through is important. Some people find this process nearly as hard as the initial decision to separate. But the difficulty of the conversation shouldn’t stop you: you need the support of your loved ones during this time.
60% of 2nd marriages end in divorce.
73% of 3rd marriages end in divorce.
Take the time to decide what you’re going to say and how much to disclose. It’s your decision whether or not you bring up things like infidelity or substance abuse problems. If people press for answers you don’t want to give, it is within your right to say, “Thank you for your concern but I’d rather not talk about it right now.”
Be prepared for a few of the responses to surprise you. Some people may feel guilty for not seeing that you were in such a rough place in your relationship. Others may not have liked your spouse and be happy for you – and their joy upon hearing of your separation might rub you the wrong way. It’s a good idea to clearly express what you need emotionally at this time. Statements like: “I just need support,” or “I may need a companion around more often,” will go a long way in preserving your support network – and your sanity.
Step 2: The Divorce Process
The divorce court process is referred to as a “petition for the dissolution of marriage.” The average length of this type of court proceeding is one year. However, that figure is an average, with some divorces taking a matter of weeks, and others a matter of years.
Overview of process:
- Typically a divorce starts with a conversation between two spouses where they agree the marriage is irrevocably broken and will end.
- One spouse drafts divorce papers, typically with the help of an attorney. These papers are given to the other spouse.
- At this point, it’s a good idea for the spouse receiving the agreement to have it looked at by their own legal counsel.
- Both spouses sign off on the agreement, which is presented to a judge who makes the divorce official.
Do Both Spouses Need a Lawyer?
The short answer is no, but be very careful.
In most states, a couple can participate in what’s called a “mediated” divorce. In a mediated divorce, the couple hires a neutral third party to reach a mutually agreed upon settlement with the needs of both spouses in mind. Collaborative divorces work in the same way and rely on both spouses to be civil during the entire process.
However, these processes are not the same thing as just signing what your soon-to-be ex-spouse’s lawyer has prepared – and doing so is not a good idea. Your future ex-spouse’s lawyer is getting paid to act on your ex’s behalf, not yours. This becomes especially relevant when there are things like child custody, houses or other major assets like a structured settlement at stake.
Bottom line: If your spouse provides a divorce agreement for you to sign which has been prepared by their attorney do not sign it without consulting a lawyer of your own.
How Much Is a Divorce Going to Cost Me?
There’s a dark saying in the divorce world: “Love is grand but divorce costs twenty grand.” And it’s not far off. Getting divorced can cost nearly as much as getting married does, with the average divorce costing between $15,000 to $20,000 in the United States.
Possible costs in getting divorced:
- Court fees
- Neutral Evaluation fees
- Mediation fees
- Cost to change name
- Added cost to refinance home
- Discount rate to sell assets
- Changing deed on a home
- Attorney fees
- Required parent education classes
- Guardian ad Litem fee
Step 3: Dividing Assets and Debt
As the divorce proceedings go forward, your assets as a couple will get split up. This process is much easier when there is a prenuptial agreement; however, most couples don’t have one set up.
Divorce varies significantly from state to state. Keep this in mind when looking at internet resources for divorce. For example, a New Jersey Divorce is very different from a Texas divorce.
Unique divorce laws restricted to particular states:
- Hawaii, Illinois, New Mexico, North Carolina, South Carolina, Utah and Mississippi all allow for a spouse to hold a third party liable legally for the dissolution of the marriage. The typical application is in cases of infidelity.
- New York law states that a nursing degree, medical degree, law degree, or any other professional degree or license earned during marriage is marital property. Meaning, the future earning potential from the degree can be considered marital property.
- Texas, Indiana and Rhode Island do not allow for the divorce of legally married gay couples.
What About Equitable Distribution Versus Community Property?
Most states use the process of equitable distribution in divorce proceedings. In these states, typically only marital property, in other words things obtained during the marriage, are divided. Anything you had going into the marriage is considered yours.
Equitable distribution doesn’t automatically mean assets will be split exactly fifty-fifty – it means negotiations start at an attempt of a 50/50 split.
Not all states use equitable distribution. California, Texas, Nevada, and Idaho follow the community property division process. In this case, a judge lumps property obtained before the marriage in with property obtained after the marriage and then begins to divide the assets in half.
What Happens to My Structured Settlement in a Divorce?
Two major factors go into how a structured settlement is handled in a divorce: First, whether you live in a community property state versus an equitable distribution state, and second, the timing of when your settlement was obtained.
If you live in a community property state, it can be split up between the two spouses regardless of when it was obtained. However, this is not always the case. Especially in the case of a structured settlement issued due to a medical condition, the affected spouse may retain a significantly larger portion if not all of the settlement. A divorce lawyer or mediator with experience dealing with complex assets should be consulted.
In an equitable distribution state, how a structured settlement is handled in a divorce is more dependent on when the settlement was issued. If issued during a marriage, it may be considered marital property and subject to equitable distribution. If issued before, it is more likely to be considered non-marital property. Again, this doesn’t automatically mean each gets half, but it can mean that the person the settlement belonged to might not automatically get all of it.
Who Keeps the House?
This is often the first asset a couple discusses because living with your soon-to-be ex isn’t something most people want. A house can hold a significant amount of emotional attachment. If you find yourself fighting hard to keep the house, take a moment to step back and examine why you feel this way.
Before deciding who stays, both homeowners should create comprehensive budgets to see if either can even afford the mortgage payment on their own. If you want to win just for the sake of winning and later find you can’t afford it, you’re going to end up losing in the long run.
How Will Debt Be Divided?
Debt is a tricky one and should be handled carefully. Make sure that attorneys from both sides carefully evaluate all accounts to decide who is responsible for what and clearly state it in the divorce decree.
It’s not only about splitting up the money in a way that’s equal. The length of history on an account is a key factor in the credit score of the person it belongs to. Meaning, if your name remains on all the newer accounts and your ex gets all the older accounts, your ex will have a higher credit score.
What Will Happen with My Kids in a Divorce?
Both you and your soon-to-be ex are still the parents of your child. No court ruling will ever change that.
It’s in the best interest of you and your child for you to avoid saying negative things about your ex in front of your child. However, keep in mind you are only human. Set aside kid-free time to talk to a trusted friend of family member to voice the things you’re going through.
Managing a Minor’s Structured Settlement in a Divorce
Structured settlements are often set up after parents win a medical malpractice case in which a doctor’s error lead to their child being significantly harmed or disabled. The scheduled payments are meant to cover the child’s living expenses and ongoing medical needs.
Unfortunately, the sad news is that parents of a disabled child are significantly more likely to divorce. In the event that parents of a child receiving settlement payments get divorced, who manages the payment streams will need to get laid out in the divorce agreement.
If the parents agree to a more evenly split custodial arrangement, a trust fund can be set up to receive the settlement payments while the child is a minor and allow both parents to access the funds from the monthly payments.
Your Child’s Health Insurance
Part of the divorce decree should include who will provide health insurance and pay for health care expenses for the children. This is something that should contain a detailed list of what is considered medical and health related and what is not.
Within your divorce agreement, you should include monthly premiums, co-pays, and medication costs as well as dental, orthodontic, and emergency care.
Don’t assume your gender will guarantee custody one way or the other. Most courts in the United States want both parents to continue to be a part of their children’s lives. Fifty-fifty legal and physical custody is the goal of most custodial rulings when the circumstances will allow for it.
Custody can make tax time tricky. Who gets primary custody also determines who gets to claim the children on their tax return. This is something that should be explicitly stated in the divorce agreement to avoid issues down the road. Some parents choose to alternate years, while others will each claim a child in the event of an even number of children.
The non-custodial parent typically pays child support, which can take into account both parents income.
Many states, like Florida, have outlined guides for how much parents pay in child support. A quick search of your state’s department of revenue should reveal some ballpark figures that your lawyer will begin discussions with.
Moving on From Your Divorce
Once you’re divorced, do some paperwork housekeeping to make sure that your ex is not the emergency contact or beneficiary on any of your financial documents or medical accounts. Obtain a copy of your certified divorce decree and put it with your other important documents.
Emotionally distance yourself from the experience. You are not your divorce. You are not the emotional baggage that you are carrying at the moment. The betrayal you’ve experienced does not define you.
Change is difficult. It’s okay to be upset. And it’s okay to move on.