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Divorce Financial Settlement

What is a Divorce Financial Settlement?

A divorce financial settlement is the agreement or order directing how assets and debts are to be divided between the parties in a divorce. As such, it is part of the larger divorce settlement agreement. Most divorce financial settlements will involve dividing the entire estate equally 50/50; however, there are certain times when it is more equitable to have one spouse receive more assets or less debt depending on childcare, current salaries, and other factors. Generally, being informed and having open communication with your soon to be Ex will lessen the tension and hopefully lead to an amicable settlement across the board.

However, reaching an agreement can be complicated, with hundreds of questions about attorneys, consultation, and the tornado of paperwork that separating brings. How do you ensure that your financial settlement benefits you? How do you know that your lawyer is really working in your best interests? With all of these concerns, it’s no wonder why Psychology Today links divorce stress to physical health problems.

As a woman, your primary focus should be ensuring that you achieve the best business transaction for you–that you and your children are set up for healthy living after the split. To that end, here are some answers and general advice about how best to go about a divorce financial settlement.

Should You Settle Before or After the Parenting Agreement?

Ideally, it is best to figure out your budget first, parenting time second, and then settle the financial agreement third. To do this, sit down with a financial advisor and outline your monthly budget to determine what you need to make sure you can live as comfortably as possible. Understand that you will have to compromise. Most likely, you will not have the same standard of living you experienced while married. At the very least, you’ll need to make sure you have enough to cover your bills and essentials.

From there, calculate how much it would cost to clothe, feed, and house each of your children. You will need to factor in how much you will be receiving or paying in child support.

When determining your budget, remember to factor in hidden costs. Ask your financial advisor about inflation and taxes to make sure every expense is accounted for.

Answering these questions first will make it much easier when discussing the parenting agreement or the financial agreement. By having all your answers ready ahead of time, you will be prepared for every question thrown at you. It will also ensure you are not agreeing to things that may cost you more down the road.

How to Make Sure Your Divorce Financial Settlement is in Your Interest

It can be hard to divide finances evenly when there is an obvious bias between you and your Ex. Maybe you’re a Stay-at-Home-Mom or the primary breadwinner in your marriage. Hiring an attorney to negotiate helps ensure you get what is rightfully owed to you, or that you are not overpaying.

You need to be honest about everything financial. Armed with the budget you outlined before, be prepared to express your needs and be open about what you can compromise on. Sharing this with your lawyer will help you and your lawyer to come to the table with all the facts laid out; this is the best way to ensure you have financial security after the separation.

If you are concerned your partner is not telling the truth about their finances (he* wouldn’t be the first!) then a divorce lawyer can help. Leave the investigating to them. You need to focus on yourself and your needs right now.

When offered a document, it’s important to remember this rule of thumb as your creed: you will have to compromise. If it sounds like you are not compromising, then it is too good to be true.

Whom to Consult Before Submitting A Settlement to the Other Side

After consulting with the financial advisor to determine your budget, you need to sit down with a divorce lawyer to figure out your best course of action. Make sure to bring your budget calculations, tax returns, pay stubs, any prenuptial or separation agreements.

If you have any other legal documentation involving your children or Ex, such as a court case, bring that paperwork too. Your lawyer needs all the information they can get.

Once you bring everything to your lawyer, you need to see what exactly your lawyer can do for you. Their job is not to punish your Ex or go for revenge: they are advocating for you. You want a lawyer who is competent and experienced at their job, and you can ensure this by how they answer the following questions:

  • How many divorce cases have you handled?
  • How did you handle those divorce cases?
  • What is your fee structure?
  • What is the best method of communicating in the future?

If your lawyer stumbles, stutters, or does not have an answer to these questions, you may want to consult other legal counsel. (For more savvy questions to ask a divorce attorney, visit here.)

Divorce Financial Settlement Must-Knows

Just like how you have questions you need to ask your lawyer, you also have questions you need to ask yourself.

  • What do you own? See if you are listed as the owner of your car, home, and other assets. Noting what you brought into the marriage could keep your Ex from claiming it.
  • What do they own? If your spouse is eligible for social security benefits, insurance payouts, or a pension plan, you may have a claim to them.
  • What do you both own? You need to factor any jointly owned assets into the final agreement. Dividing 50/50 does not always mean fair.
  • What about taxes? If you have to choose one government agency not to mess with, choose the IRS. Consulting a tax accountant will save you lots of money.

Above all, try to be as objective as possible. This is an emotional time, but money does not cry. Finding a safe space for your emotional outlet (a therapist, a coach) will honor your heart and feelings while your brain must focus on the best business transaction for you. Encouraging your brain to stick to the facts will ensure that you come out the other side prepared for the single life.

Notes

Jeanette Soltys is a Partner and Divorce Attorney at Atlanta Divorce Law Group in Alpharetta, Georgia. A passion for wanting to help children and families seeking their happily ever after led her to pursue her Juris Doctorate from Wake Forest University School of Law. Visit Jeanette Soltys’ website to learn more about her, her law firm, and the services her team offers to families.

Since 2012, SAS for Women is entirely dedicated to the unexpected challenges women face while considering a divorce and navigating the divorce experience and its confusing aftermath. SAS offers women six FREE months of email coaching, action plans, checklists and support strategies for you, and your future. Join our tribe and stay connected.

*At SAS, we support same-sex marriages. For the sake of simplicity, however, we may refer to your spouse as “he” or “husband.”

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3 Steps Women Can Take to Get Smarter about Money

Too many women bury their head about money matters.

I have banged my head on my desk over and over again, just not understanding why women still place money on the back burner. Overall, women just don’t make money issues a priority in their lives.

As a financial advisor and a woman, I feel it’s important to empower women through free financial education. Along the way, I have discovered that it’s a huge challenge to try to convince women that they need to know more about their money.

Don’t get me wrong. Women do think about money. Our gender is very good at worrying about it all the time.

According to the American Psychological Association report “Stress in America,” women are much more stressed than men, and our biggest stress is money. Dr. Helen Coons, president and clinical director of Women’s Mental Health Associates, explains. “It’s the socioeconomic and relational context of women’s lives here in America,” she said. “A high percentage of women have dependent children, work outside the home and then come home to a second shift, often with inadequate support.

“We still see gender inequity,” she adds. “Women earn less, and if they’re employed part-time, they’re less likely to have health benefits and financial resources.”

A recent Prudential study on the “Financial Experience & Behaviors Among Women” shows, unfortunately, that women have not come a long way when it comes to money. Women feel no more prepared to make smarter financial decisions today than they did three years ago — or even a decade ago.

When asked about their confidence in themselves to achieve their financial goals, women had responses that startled me. This so-called “confidence gap” has not improved over the past 10 years, either. Really? No improvement?

“Women have been disenfranchised,” said Dr. Kate Levinson, psychotherapist and author of “Emotional Currency: A Woman’s Guide to Building a Healthy Relationship with Money.”

“Society doesn’t empower us,” Levinson said. “We’ve been acculturated to stay dumb about money — legally, and culturally, for generations.”

After reading these studies, I was quite shocked.

The studies did get me thinking, and they helped me understand why women have what I call the “ostrich effect” when it comes to money. Women, overall, refuse to accept reality, preferring to ignore the truth that we need to know about money. Instead, we bury our head in the sand.

We don’t get in the money game, because we do not want to get messy, and money can be a little intimidating. You could make a mistake or two, and you probably will. Heck, I would say that I have made at least that many mistakes. This is coming from a woman who thinks, breathes and lives her life learning as much as she can about money.

And while I will admit that I have made many mistakes along the way, I have made many more fantastic money decisions. The goal is to take action and take control of your financial life.

I would like to share three simple steps you can take now to become smarter about your finances.

1. Get educated

Learning about money is important, and the more of a role you take, the more enjoyable it becomes. I started off taking a few classes at New York University and loved it so much that I have devoted my entire life to educating others about finances.

This might be a little extreme (I admit that I am a total nerd), but I can guarantee that you will be better off if you start to get a handle on your finances. There are hundreds of books, podcast, blogs and videos that can help you gain a better understanding of your personal finances. Dr. Levinson insists that we can’t “stay dumb” about money. “It limits our options in the world, not to mention feelings of self-worth and competency.”

2. Track and budget

In order to make smart decisions about your money, you have to understand where your money is going. Start by tracking your expenses for one to two months. Once you see where your money is going, you can start to weed out the unnecessary expenses. Use this information to create a budget that reflects your needs instead of your wants.

To help make tracking and budgeting easier, you can download smartphone or tablet apps such as Mint, GoodBudget and Expensify. Creating and keeping your budget is one of the simplest ways to not only learn about your finances and spending habits but to be more informed and involved so that you can make smart decisions about money.

3. Start saving now

Retirement might seem like an eternity away — especially for women in their 20s, 30s and even 40s — but saving for it is incredibly important for financial security. The earlier you start saving for retirement, the better your financial picture will look in the future.

If your company offers a 401(k) plan or 403(b), make sure you contribute as much as you can. This is especially important if they offer to match your contribution. Remember, this is essentially free money going into your retirement account. If your company doesn’t offer a 401(k) or 403(b), consider opening a traditional or Roth IRA. The sooner you start saving, the longer you are allowing your money to grow.

Women can be very smart with money. All we need to do is start getting in the game and stop believing that financial issues are too complicated for us to understand.

(This article was originally published on CNBC.com and has been reprinted by permission of its author, Stacy Francis.)

Early in her life, Stacy Francis witnessed how devastating life could be for women who were not empowered through financial education. Her grandmother stayed in an abusive marriage because she did not have the skills to effectively deal with money. That experience changed Stacy’s life and drove her into the finance field.

Stacy is president and CEO of Francis Financial, a fee-only boutique wealth management, financial planning, and divorce financial planning firm, and the founder of Savvy Ladies, a non-profit that has helped over 12,000 women across the spectrum of ages, life experience, and income levels identify their goals, make proactive choices about their finances, and lead richer, more rewarding lives.

Although SAS for Women® periodically features links to and writing by other professionals on the SAS website, SAS for Women® is not responsible for the accuracy or content of that information. As for what is best for you and your future, SAS always recommends you speak to a professional to discuss the particulars of your situation.