If you’re a divorce attorney, you’ve probably seen many clients who are struggling with poverty as a result of their divorces. We’ve put together this guide to point out some common pitfalls that lead to financially unfair settlements, as well as some simple steps that divorce attorneys and their clients can take to get proper compensation without delay.
When a divorce occurs, it’s essential that both spouses face the same financial reality going forward. Everybody has heard the old adage, “Marriage is a partnership. Divorce is a dissolution of that partnership.” This means that both spouses must be prepared financially to live on their own if they are to make the transition into post-divorce life as smoothly as possible.
The reality is that in many cases, one spouse ends up with significantly less income and assets than the other spouse after a divorce. Additionally, all of this money is often earmarked to pay alimony or child support. The result is that one spouse’s financial situation is far worse than the other’s, and it’s important for them to understand how to maintain a comfortable lifestyle with such a small amount of money.
Tips to Help Ensure a Financially Fair Divorce Settlement:
Table of Contents
- Tips to Help Ensure a Financially Fair Divorce Settlement:
- 1. Do Not Allow Your Client to Become a Financial Victim:
- 2. The Divorce Process: Litigation, Mediation, or Collaborative?
- 3. The Tax Factor: Should Your Financially Naïve Client Sign Joint Tax Returns?
- 4. Evaluating Settlement Proposals: Is the Proposed Settlement Financially Fair?
- 5. Letting Go of Emotional Attachments to Specific Assets is Key to a Financially Fair Divorce:
- 6. Warn Your Client about “Too Good to be True” Settlement Offers:
1. Do Not Allow Your Client to Become a Financial Victim:
It’s a sad fact that some divorce attorneys and their clients allow themselves to become financial victims to their spouses. It can be easy for spouses to get caught up in the emotion of divorce and feel like they are entitled to more money than they are actually due.
Remember that while emotions can run high during divorce, it’s your duty as an attorney to help your client remain financially stable after the divorce has ended. By doing this, your client is more likely to feel fulfilled in the long term.
2. The Divorce Process: Litigation, Mediation, or Collaborative?
Most divorce cases can be handled through litigation, mediation, or collaborative methods. The decision of which to use is a highly personal one that many divorce attorneys don’t have an opinion on. In some cases, litigation can be far more efficient and cost less than a mediated settlement. If your spouse has the money for a settlement through litigation, this means that you will probably get paid faster than if you were to go the mediation route.
If your spouse is more interested in going the mediation route, remember that this is a compromise for both parties. If your spouse compromises significantly on issues like property division, child custody, support, or alimony, you could end up with a much better financial outcome.
3. The Tax Factor: Should Your Financially Naïve Client Sign Joint Tax Returns?
When you are representing a client in a divorce, one of the most important things that you can do is to make sure they pay as little taxes as possible. This will allow your client to keep more of their assets since they won’t have to pay taxes on as much income as before.
One thing that clients frequently ask is whether they should sign their tax returns jointly or separately. In general, married couples should file separately because this will allow the higher-earning spouse to keep more of his or her income. Of course, there are many exceptions to this rule, and some tax attorneys can provide better advice than others.
4. Evaluating Settlement Proposals: Is the Proposed Settlement Financially Fair?
With the exception of blended families where the parties have agreed to a blended or shared parenting arrangement, a divorce agreement is subject to interpretation and may be challenged or litigated on many different grounds.
The safest way to avoid such challenges is for the parties to come up with a financial settlement as part of their divorce agreement that will seemingly provide both spouses with what they are due. Unfortunately, this is easier said than done, and many times spouses will employ lawyers who then come up with settlements that are not fair. Thus, it is important that you take the time to evaluate and analyze settlement proposals to ensure they are fair in every way.
5. Letting Go of Emotional Attachments to Specific Assets is Key to a Financially Fair Divorce:
Simply put, you need to know when to let go of assets that don’t have utility for your client in the post-divorce world. This means that if a spouse gets custody of his or her property, he or she will likely be very reluctant to sell it. If this is the case, then you must be prepared to work out a fair settlement without this asset. Conversely, you might negotiate to get your client other assets that may have more utility in the future.
6. Warn Your Client about “Too Good to be True” Settlement Offers:
While it might be tempting to accept a settlement that is “too good to be true,” you must remember that after a divorce has been finalized, all assets are required to be split, and any assets that are determined not to have been fairly and equitably considered will be subject to post-divorce litigation.
This is why it’s extremely important that you help your client determine whether or not the settlement they are being offered is fair and equitable. This can only happen if you warn your client that the perception of an “excellent” settlement offer is often far different than the reality of what it entails.
With the world moving at an increasingly rapid pace, people tend to let go of their assets more quickly than ever in a divorce. The result is that even though most couples will exaggerate the number of assets they have at divorce, they often end up with far less money than they were originally expecting.
Remember that it’s your job as a divorce attorney to help your client understand this, then work with them to ensure that the divorce settlement still provides both spouses with what they are entitled to and can live comfortably on.