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By Irving H. Zaroff, JD LMFT and Dana Schutz, MA LMFT
I'm an excellent housekeeper. Everytime I get a divorce, I keep the house.
~Zsa Zsa Gabor
Today’s economic climate has impacted rocky marriages in unusual ways. Getting and/or keeping jobs, trying to keep afloat in a housing market crash, and the looming uncertainty of the times has put undue pressure on budgets and budget planning for the typical couple and family. When you add in a tense relationship and the financial stress that separation and divorce contemplates you have a recipe for truly hard times.
Ironically, this is a time when “working together” is the best (and sometimes the only) way to create a practical and effective way of separating. The California legislature and courts have designed a system of divorce with the intention of removing the hostility of the “blame game.” But in a battle to “get everything I’m entitled to,” it’s a return to pain, anger and resentment of the past.
Working together a couple can collectively gather all the information about financial resources (i.e., income, investments, properties, etc.), create an accurate picture of financial demands (i.e., household and personal expenses, debts, investment planning, etc.), consider lifestyle adjustments (i.e., scaling down) and develop a plan to create a two-household budget from what was once a single household.
One of the first things to consider in a projected budget is cash flow. You need to make sure enough cash will be available to meet the expenses of each household. This may affect the distribution of property since some property provides cash (bank accounts, marketable securities, etc.) and others do not provide “easy” cash (family home, automobiles, etc.). Think about the tax impact on the property distribution. If values are fairly equal, one item may have big tax consequences (investment that has greatly appreciated) as opposed to items that won’t have as great a tax burden (selling the family home protected by a $250,000 tax exemption). Retirement accounts may provide cash, but if distributed early are subject to tax penalties.
Working together requires a willingness to create a plan that will support the best lifestyle for each family member given the resources available. It will rarely be as good as it used to be.