Divorce costs can escalate quickly, especially for high-asset divorces. Often, for those that seldom worry about money, the financial reality of a divorce can be lost in the process. This is why it is so important to try and maintain a divorce budget, or at the very least, limit expenses to the extent reasonably possible.
Remember, one household is now two
Even if a couple is extremely wealthy, one’s wealth will likely be divided in, at least, half. This means that one’s standard of living may, and likely will, be affected because it is much more expensive to maintain two households than one. And, if one of the spouses was a stay-at-home parent, this calculus gets even more grim.
Perhaps, the best way to mitigate divorce costs is to avoid litigation. Mediation and collaborative law can help mitigate the chances of divorce litigation because the parties agree to work together to find mutually agreeable solutions. Of course, if it does not work, then litigation will still be needed.
The next key to divorce cost mitigation is a willingness to work together to eliminate the emotion from the process. Realize that the divorce process, while emotionally fraught, is not, necessarily, an emotional process. If one can approach divorce as simply figuring out how to make one life, two, then all the fights that escalate costs can be avoided.
Often, divorcees lose the forest through the trees and do not think about their long-term needs. For example, perhaps, giving up more money or assets up front can make sense to get more money in retirement. Conversely, perhaps, less cash now for a higher stake in a family business makes more sense in the long term.
Do not forget about taxes. Of course, Florida has much less taxes than many other states, but the IRS will still come for their piece, especially when it comes to capital gains as investment assets are sold, or possibly, transferred. As our Coral Springs, Palm Beach and Broward County readers can see, divorce can get complicated. This is why divorcees often have a team, which includes not just a lawyer, but also financial advisors, CPAs, etc.