Divorce in difficult financial times

I don’t mean to ignore the other important aspects that often occur in a divorce — custody and visitation of minor children, spousal abuse, marital infidelity, and the very real pain of just being rejected by your spouse — but looking only at finances, should you get divorced in today’s difficult economy? 

There are several pro and cons depending on your situation.

If you’re the primary financial earner, you may be in a position to have to contribute less to your spouse because either your income may be lower (if your job itself isn’t in jeopardy), your retirement has probably declined with the stock market losses, and the value of your home is probably less.

If you’re still capable of earing a good income, this may be the perfect time to get divorced as it relates to a division of your assets.  (Again, I’m ONLY dealing with the financial impact of a divorce.)

If you’re the primary bread winner, the difficult thing about divorcing in today’s economy is that you’re losing the value of your possessions in the recession AND then giving away 1/2 of what you have left to your spouse.  It can feel as if you’ve worked hard to earn all these things and are being left after a divorce with little to show for it.

What about if you’re not the primary breadwinner — is this a good time for a divorce?  If you’re short on income, probably not.  The real problem is going to be that you don’t get as much of a financial cushion if you get divorced. 

Would you rather split a 401(k) that has $1 million or one that has $500,000?  Would you rather have a house worth $400,000 or one that is worth $250,000? 

Clearly if you don’t have a high earning capacity that will allow you to “make up” some of this loss of value due to the economy, it’s probably not in your best interest to get divorced now.

The flip side is that if you’re awarded the house and you’re able to keep it due to a low mortgage, you’re probably getting it at an excellent time that will allow it to appreciate when the economy turns around.  So if you have enough earning capacity to keep your marital home, you may be able to reap substantial rewards when the economy improves.  Of course, no one knows if that is going to happen this year — or in 5 years!

Is divorce the right decision for you in today’s tough economic times?  It all depends on how you look at it.

 

Comments

[Solicitors in York]

Hi,

Financial problems often drive couples apart, but the nation's overwhelming economic crisis may be holding them together.

[law costs draftmen]

I don't see how it is holding them together. I think divorce rates will continue to rise.

[Andrew Mooers]

A shortage of money is not going to make a sketchy barely held together marriage better..more stress and strain in folks I run into that have to sell their home to make it happen.

[Joe Cream]

Earning capacity is an accounting
trick. It should not even be a law. It is a fraud upon the general public. It is the equvalent of what toxic assets
are to today's economy. Paper wealth made by the family court Judge that does not exist. He
gives it a AAA grade. The when
it naturally defaults. Another
Judge tries to collect the paper
wealth that does not exist. A BIG
FAT FRAUD. Practice and endorsed
by family judges and attorneys. God bless the divorce industry and their ethics.

[Virginia Divorce Lawyers]

Nowadays people never think about finances if they are determined for divorce. Everything including economy becomes secondary for them. In my opinion, first do your best to keep a healthy relationship but if there is no chance except separation then do it peacefully and with dignity.