There are many types of divorces, from the mutually agreed quick and simple, to the long and drawn out affairs that sometimes make the entertainment sections of the news. The adage that says “the simpler, the better” is very true when dealing with divorce. Two people living in an apartment, with minimal debt, no children, and few assets will probably not spend much time haggling over details during the process. But add one child, a joint bank account, a house, and tens of thousands of dollars in credit card debt, and you have plenty of room for the devil’s presence in the details.
What Are These Devilish Details?
The natural question to ask is what details can prove to be so devilish? Sometimes they are brought on by carelessness; thinking that things are simple and clear, and that both parties understand what is required. But more often it is a matter of understanding legalese, because what is a simple to understand word for the non-legal person ends up having an entirely different meaning in the legal world.
Using specific examples of where settlements can go very wrong, very fast can best illustrate the reality of the details.
Taxes And Division Of Property
Many states have community property laws that equally divide the assets in half. The idea of 50-50 sounds reasonable and equitable. Investments are also property. An equal 50-50 division appears to be fair, but in the case of investments there is the tax angle to consider. You have to determine the value of the investments on an after-tax basis before agreeing to the division. If not, the amount you end up paying in taxes could make the actual division of property more like 40-60 in favor of one party.
Child Custody And Support
Naturally, this would be one of the most devilish of the details because there is so much at stake financially, emotionally, and legally. This area covers everything from where the children can attend preschool to financing their college education and more.
One of the most overlooked issues in agreeing to child support and child custody arrangements is the future. This may sound strange, but many times the two parties are so interested in wrangling over who gets the children that they forget children are 22 year investments. The cute five year old will grow up to become a college student, with tuition, room and board, and out of pocket expenses. The custodial parent can overlook this fact and not remember to place in the child support agreement issues such as the rate of annual inflation, property tax increases, or rising medical insurance premiums.
As for actual custody of the children, one detail that can easily overlooked and so not enforced, is the issue of how much influence the non-custodial parent will have in determining how their children are raised. This issue gets particularly difficult when the custodial parent remarries. Though the child support agreement can be later modified by the courts, it is best to establish a framework that both parties can live with and make adjustments as necessary.
Social Security Benefits
If you are over 50 and are going through a divorce, it is essential that you know this detail about Social Security. Because the Social Security laws will likely change over time, this will not be a major consideration for those in the under 50 group.
If you have been legally married or in a state that recognizes common law marriages, for 10 consecutive years, your spouse will be eligible to collect 50 percent of your total benefit amount when you apply. This legal reality needs to be considered when agreeing to any type of alimony payments over an extended period of time. Also when discussing distribution of other retirement benefits or distributed investment income, decide when you will begin collecting Social Security and how that will affect your personal retirement situation.
Finances, children, and retirement are three major areas where devilish details may be found, and they can cost a person thousands of dollars over the course of their lifetime. The problem is the perspective that a divorce is for the here and now. The reality is that in most cases it is for the lifetime of the spouse. Hiring a good lawyer and tax accountant can prevent you falling into many of the innocent looking but costly traps of the divorce agreement.
Don’t get drowned in the details; let us guide you through the divorce process and pick out all those little issues that might just trip you up.
