For many Illinoisans, divorce is fraught with many emotions, one being fear; fear that they will not get a fair share of the property division, fear that they will end up with the “bad” assets, fear that they will have to make a substantial post-divorce lifestyle change. These fears are particularly salient for the so-called “out spouse,” that is, the spouse less familiar with the couples’ financial situation. But, like most fears, knowledge and preparation can do a lot to inoculate against the potential sting.
To deal with the first fear, not getting a fair piece of the property-division pie, requires doing a little homework. First, figure out what the couple owns and then, how much it is worth. For couples with simple finances, those two steps should be relatively easy. For couples with more complicated financial pictures (for example, because of a closely-held business, multiple residences, illiquid investments, and the like), the assignment may take longer, or even require a forensic accountant (essentially a financial detective). That is particularly true if one spouse suspects the other spouse is hiding assets.
To address the next fear, not knowing what property was received in the settlement, keeping the big picture in mind is a must. Do not get lost in the details. For example, if one spouse gets the house, which was valued at $500,000 while the other spouse received $450,000 in cash, the spouse getting the house may have felt they won. But did they? The house will cost money in upkeep, taxes and other expenses. Plus, equity in the house is hard to use. Given those issues, giving up $50,000 in value to get a more favorable form of property may have been the better deal.
And, finally, to minimize the third fear, about life after divorce, a little math can make a world of difference. That is because the worry really is a question of cash flow: How much will the divorcee have after alimony, child support, and expenses have taken a bite out of their income? To put this fear to rest, have a financial advisor draft a post-divorce income and expense report.
The cure for fear is knowledge. Adopting these simple tips and talking with an experienced family law attorney may be the first step to a promising post-divorce future.
Source: CBS, “Divorce financial planner: 3 common fears,” Robert Pagliarini, Aug. 23, 2013