What you don’t know can hurt you. If you are going through a divorce in Texas there is a lot of information that you need to be aware of. Yes, if you hire an attorney it is their responsibility to advise you in regard to that information and the circumstances of your case. However, the attorney is not the decision maker. He or she is the backseat driver. You drive the car, he gives you suggestions on which way to get to your destination.
One of the areas that people who are contemplating a divorce or have just begun the process seem to have many questions is in regard to their finances. It is impossible for you to be able to make decisions regarding how to propose to your spouse that your community estate be divided until you know what the community estate represents. Once you and your spouse have exchanged discovery responses and can see where the other is operating from, then you can begin to negotiate with him or her in earnest.
Do not attempt to seriously negotiate with your spouse on your finances until you have a full understanding of your assets and debts. The first thing you can do is to do a check of your credit history and report. This is free and can be done online. This review will allow you to look at any accounts that are open in your name. Sometimes you may not even be aware that your spouse has opened up a credit card in your name. In certain cases if your spouse owns a business your name may appear as a “co-borrower” on loans that went towards the business you have no say-so regarding.
So, you need to do your homework in a divorce. Do not just listen to your attorney and do what he or she asks. You need to take it upon yourself to be an expert in your life. What money is going into your family, what money is going out. It could be that you were the spouse who was not the “money person.” You earned the bucks, but did not take part in determining how they were spent, saved or invested. From my perspective, I would say that the time to be a spectator in the game of money management ended at the time the divorce was filed.
Keeping a budget- now and in the future
Can I interest you on keeping a detailed run-down of your monthly income as well as all of your household expenses? I hope so. People that live on a budget, believe it or not, feel more empowered to spend money than people who do not live on a budget. I know this may seem counterintuitive but stick with me.
People that live on a budget know exactly how much money they have to spend on things each month. There is no wondering where their money went. There is no wondering whether or not they have the money needed to buy something. Either the money is there or it is not. Budgets are also important for those who are working to pay off debt. If you are spending money on unnecessary items those are things that can be taken out of the budget so that your spending can be minimized.
Whatever phase of your life that you find yourself in, you can rest assured that budgeting is a positive and not a negative. I have never spoken to a person in my years of practicing law who has told me that a budget has made their life worse. Invariably, people will tell me that budgeting caused them to become more intentional about how and where their money is spent. This allows for greater autonomy and freedom when it comes to making financial decisions.
How does budgeting relate to your divorce?
That’s all good and well, you may be thinking, but how does budgeting help you during a divorce? I’ll tell you how. You need to begin the budgeting process during a divorce because you and your attorney need to make sure that you are going to have enough income to be able to survive during the divorce. Remember that your spouse’s income largely goes bye-bye during the case. If you are working part time, coming off a long run of being a stay at home parent or generally don’t make a ton of money, then you need to know how much your shortfall each month will be.
After that, you can have a much better idea about how much money you should be asking for in child support and temporary spousal support. If your spouse has paid the lion’s share of the household bills then that will likely continue during the divorce. However, you cannot simply tell the judge that you don’t make a lot of money and therefore your spouse needs to pay the bills. You have to have gone through your budget and produced evidence that convinces the judge of this.
Another reason why you need to start budgeting by the time that your divorce is underway is because you need to have a good idea of what your expenses and income will be once your divorce is over with. The thing about financial aspects of divorce is, you cannot go back to court whenever you want to increase the amount of spousal support you receive. You can in regard to child support, if your circumstances warrant a change. However, the division of your community estate is set in stone at the time your divorce concludes.
Do you or your spouse have a pension?
It used to be that most jobs had pensions. Pensions are a defined benefit plan that can be used as a retirement vehicle. A portion of your income was put into the pension fund for your employer on a monthly basis automatically. The pension would be invested (usually conservatively invested) and then you would be entitled to a specific amount of money that is paid to you out of the pension after you retire. Your spouse could receive pension benefits after you die but any funds due to you after your spouse’s passing would revert back into the pension fund.
It’s the case in many divorces that that pensions are the most valuable asset. You need to seriously consider the value of these future benefits that will be paid to you or your spouse before you settle your case. The marital portion of these benefits (the part that was acquired during the course of your marriage) can be divided within your divorce. Some research will need to be done in order to figure out how much your pension is worth on a monthly basis so that settlement negotiations can occur.
Is personal property a big deal in a divorce?
What I tell clients when it comes to personal property is that when we start to get to the point of a divorce where the parties are fighting over video game controllers and candle stick holders, it is a good sign that the case is almost complete. There are bigger fish to fry than some personal property for most people going through a divorce. Once you can start to focus on the personal property aspects of the case it is probable that there is not much case left to fight about.
My point is that you should not spend an inordinate amount of time or energy going back and forth with your spouse on personal items. You may have a family heirloom that you absolutely need back from the house. Usually items like this will not be claimed as community property by your spouse. For anything else, you need to remember that you are spending money to recover something that probably is not worth the money it would take to get it back. Your attorney can spend two hours trying to negotiate regarding the silverware, but I doubt the silverware is worth it.
Do not get bogged down in fighting over personal property. Doing so will cause you to lose sight of the important issues in your case. That may be just what your opposing party wants. Many times a client will spent a great deal of time trying to get a computer, flat screen television or other piece of electronics. Keep in mind that what is new today will be basically obsolete in three years. You can argue that something is valuable, but a judge would likely award you the value of the property in a re-sale (garage sale) market, rather than at the store where you purchased it.
Emotions and the family home
A few days ago we wrote extensively regarding issues related to your family home. I would advise you to go back and read that blog post if you have not already done so. Some people are willing to bend over backwards and pay a great price in order to stay in the family home. I have a former client who paid his wife $8,000 a month in spousal maintenance in order to remain in the family home. It was that important to him that his kids be able to play in the house they grew up in, he said.
If you ask me, however, I think he paid that extremely high amount of money to stay in the house because he had an emotional attachment to the house- regardless of how his kids felt. If you list your family house as a part of your divorce that you cannot bend on, i.e.: that you will do whatever it takes to stay in the family home, then I would counsel you to slow down on doing so.
The family house is an asset but it can also siphon away money from other, more necessary endeavors. Remember: a house is ultimately just a house- even one where your kids grew up. There is a house on every corner. Many of which are in your price range. It may be in your best interests to recover, financially and emotionally, from the divorce before making a decision on long term housing for you and your family.
In an immediate sense, the costs of living in a home can be extremely high. Going through a divorce does not make the costs of living in the home decrease. There is no shame in agreeing to downsize your home, cash in on the equity to your current home and then sell the old house. Consider the memories made in your current home that can potentially be painful as you begin to comprehend the hugely important nature of your divorce.
You can choose to remain in the house, your spouse can remain in the house and you can be paid the equity that is yours or you can sell the house and then split the equity with your spouse. I have also seen spouses agree to rent the house while the real estate market improves.
Figure out what you want and why you want it
Ask yourself why you are pushing for certain things in your divorce and what those things are. You have to have a plan in place as to why you are asking for certain things in your divorce. Drifting from issue to issue is not a smart thing to do in a divorce. We will begin tomorrow’s blog post by discussing this issue in greater detail.
If you have any questions about the information that we wrote about in today’s blog post please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultations six days a week. These consultations are free of charge and allow you to ask questions and receive specific responses to the problems and issues that you and your family are facing.
We represent clients across southeast Texas and are proud for doing so. It is an honor and a privilege to be able to work along side our neighbors in the family courts of our state.