You are probably new to the divorce process, so you may be at a loss on how to successfully negotiate the financial side of your divorce settlement. This article will highlight five of the most important strategies for success in sorting out the money side.
- Be prepared to change your mind and don’t draw lines in the sand with the other party until you know what’s for certain the best course of action for you. Over the course of a separation and divorce process, one or both parties often have a change of perspective on what’s the best course of action. For example, initially a party may want to keep the home or sell the home. Often expectations of custody arrangement play into this, where on parent may want to keep the home to keep the stability for the children in terms of schools, neighbors, activity programs, etc. As the terms of child custody become clearer, you may find it more advantageous to sell the home or rent it, or your original plan may end up being the best. Your goal is to look after the best interest of yourself and your children, so it’s often best to avoid drawing lines or going to battle until you know for sure what you want. You don’t want to pen yourself into a decision that ends up being disadvantageous.
- Look into the tax consequences and financing realities of each decision course. Initially couples tend to gravitate to simple solutions: sell the house, sell the business, have one spouse buy the other out, etc. This may be the best for you, but it may not. Talk to a professional about the tax implications of each course of action. For example, if you have to liquidate tax deferred investments in order to finance a buy out, then it may not be in your best interest to do so. If selling a business at this juncture will significantly impact its value, maybe that is not the right decision. Talk to the experts and open your mind to solutions that may initially be more complicated, but may pay big over the long haul.
- Be conservative and avoid making big decisions until your divorce is finalized. Negotiating the finances is emotional and stressful for all parties involved, and it is typically a very bad time to make huge changes in your life. Avoid changing or quitting a job during this time if possible. Keep the status quo as much as possible financially. Don’t do anything to destroy value in any of your assets or to hide income or assets from the other spouse.
- Try to settle quickly and efficiently. Some cases cannot be settled and in those instances you should feel entitled to enforce your rights. However, in many instances a negotiated settlement saves money for both parties. To the extent you can, take your emotions out of the picture and look at the numbers. Educate yourself as soon as possible on the options and the ramifications of each option. The more you can take the lead in finding meeting ground that is favorable to you and acceptable to the other party, the faster your finances will be settled and you can move forward. Typically neither party will benefit from dragging the process out.
- Consult the right people. You will get a lot of advice from family, friends and coworkers. Listen to that advice and take it for what it is worth. However, take the time to consult people with experience and knowledge. The final decision is always in your hands, but the right professionals can give you the information necessary to make good decisions.
