When you're going through divorce, you have to make an overwhelming number of financial decisions. Should you sell the house? What happens to retirement benefits? How will you handle taxes? Full of sensitive and practical advice, Divorce & Money guides you through the process of making these important decisions. It covers how to: decide whether to keep or sell the house protect yourself against misuse of joint accounts and credit cards avoid tax problems handle alimony and child support divide debts fairly avoid hasty decisions that could hurt you financially reduce risks to your investments understand how a court evaluates assets and what they’re really worth gain financial stability as a single person The 7th edition includes all new information on divorce mediation and the different types of divorce advisors out there. It also provides updated and expanded tax information, plus a completely revised chapter on custody and support issues.

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Sooner or later during a divorce, you will discover the one insight that is central to this book and to the successful outcome of your settlement: Legal reality and financial reality are fundamentally different. A seemingly simple idea -- but you'd be surprised how long it takes to sink in. To help you understand why this concept is so important, take a few moments to consider the following real-life divorce stories. In each, read the Legal Reality first. Then, see the true outcome in the Financial Reality side. Legal Reality Jonathan and Penny were married for five years before they divorced. During that time, Penny frequently ran their credit cards to the limit buying clothing, and had trouble balancing their checkbook. When they reached the final settlement hearing, Jonathan was greatly relieved when the court ordered Penny solely responsible for paying the $10,000 in credit card debts she had accumulated during their marriage. The settlement was included in the final divorce judgment, which made Jonathan feel safe. Financial Reality After the divorce, however, Penny didn't pay off the credit cards, and creditors began hounding Jonathan for the money. Jonathan ended up footing the bills, because a divorce settlement assigning debts -- even one included in a divorce judgment -- cannot change a couple's original joint obligation to their creditors. Had Jonathan raised the issue before their settlement was finalized, he could have demanded more property in exchange for paying Penny's debts or insisted that they sell some jointly held property to pay off their creditors. Moral of the story: Getting something "in writing" from the court doesn't always mean you'll get it for real. Legal Reality During their 15-year marriage, Sharon and Bill were committed to building up a good portfolio of stocks and mutual funds for their retirement. Because Sharon avidly followed the market, she wanted to keep a batch of stocks she had recently purchased and asked Bill to take stocks of equal value, which they had purchased early in their marriage. After negotiating over a few other assets, Bill and Sharon reached an agreement in which each of them would receive the exact same dollar amount in cash or assets at the end of the divorce. The court accepted the terms of their settlement, and the books on their marriage were quickly closed. Financial Reality Sharon paid attention to basic financial facts that Bill ignored: costs and taxes that decrease the value of an asset. Sharon wisely picked the stocks most recently purchased. Because these stocks had not increased substantially in value, the taxable capital gains were low. Bill, however, blithely accepted the older stocks, which had gone up a lot in value since the time of purchase. Even at a capital gains rate of 20%, he owed substantial taxes when he sold the stocks. Had he taken the time to calculate his potential tax burden before agreeing to the settlement, he could have suggested splitting the stocks so that each spouse took half of the older stocks and half of the newer stocks. Moral of the story: A 50-50 settlement isn't always equal. Lessons in Legal Reality Ending a marriage with no assets or huge debts is the hard way to learn about divorce. Your lessons do not have to be so costly. You would never try to play basketball with football rules or to cook Chinese food using classic French recipes, would you? Similarly, you must learn to follow the correct "rules" for playing in the legal league versus the financial field.

 

Introduction 1. Legal vs. Financial Realities of Divorce 2. Financial Realities No One Talks About 3. Emotional Divorce: Managing the "Money Crazies" 4. The Hardest Part: Is My Marriage Really Over? 5. The Separation: What Happens When One Spouse Moves Out? 6. Closing the Books: What Do We Do With Joint Property? 7. Getting Help: To Whom Can I Turn? 8. Financial Fact-Finding: What Must I Know and When Must I Know It? 9. Facing the Future: What Must I Plan For? 10. Protecting Against Risks to Life, Health, and Property 11. Taxes: How Do I File and Pay? 12. Property and Expenses: Who Owns and Who Owes What? 13. What Will Happen to the House? 14. Retirement Benefits: Who Gets What? 15. Financial Investments: How Do We Divide the Portfolio Pie? 16. Evaluating Employee Benefits and Stock Options 17. How Will We Divide Debts? 18. Alimony and Child Support: What Might I Pay or Receive? 19. Negotiating and Finalizing the Best Possible Settlement 20. After the Divorce: How Do I Get From "We" to "Me"? Appendix: Resources Beyond the Book --------------------------------------------------------------------------------

This guide should be an essential purchase for anyone contemplating a split, because financial decisions made during divorce can have such huge repercussions for both parties.

 

Organized like a workbook and written like an advice manual. It reduces the financial complications of divorce into comprehensible strategies.

 

Violet P. Woodhouse, noted author, lecturer, seminar presenter and consultant to the media in the areas of family law and personal finance, is a foremost authority on the financial and tax aspects of divorce. A practicing family law attorney as well as a Certified Financial Planner and Registered Investment Advisor, she pioneered the development of financial analysis of property settlements for financial planners, and often acts as a consultant to divorcing spouses and their mediator during mediation. Ms. Woodhouse is in private practice in Newport Beach, California, and has authored articles for the state and local bar associations and legal newspapers. Co-author of Nolo's Divorce & Money, she has also written articles for or has been quoted in such publications as the Wall Street Journal, New York Times, Working Woman, Lear’s, Money Magazine and Kiplinger’s Personal Finance Magazine. Worth Magazine has named her one of the top 60 financial advisors in the nation.

 

Divorce & Money by Violet Woodhouse
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