When is the Best Time to File?

Some people say, "It's all in the timing." (Others may say that it's all in the location -- but that's really a different topic!) Timing can make a huge difference in a lot of things in life. One of the most obvious is in financial matters. Investing or selling at the right time can put you in a solid financial position. For example, if I had bought American Airlines stock a few years ago when it was under a $1.00 a share because there was a very real possibility of filing for bankruptcy, and I kept it, even now there would be a nice profit. Likewise, getting out of the market at the right time can ensure a much better position compared to the person who held on to the stock just a day too long.

Apparently, some people have brought the timing issue into the divorce arena. According to the Miami Herald, some attorneys are advising their male clients to file for divorce now while their net worth is low. The idea is that they will have to give their wife less assets now than they would otherwise if the market were up. I understand the logic in that, but I still have some problems with that thinking.

1. The proportions are the same, even if the amounts are different. While it is true that the total amount paid to the spouse in settlement may be less than it would be if the economy were better, the property division should still be in a very similar proportion between the parties as it would be in better economic times. Is a $600,000 -- $400,000 split really a lot better than a $900,000 -- $600,000 since they are both 60-40 splits? Both parties would end up with less than they might in a better economy.

2. It is usually pretty easy to stall and delay in a divorce. The courts are often backed up, which means it will probably take a long time to get to court unless there's an agreement. Faced with a long wait to get to court, many of the wealthier spouses will sweeten the pot to get an earlier deal done. Or, the delay may be long enough for the economy to start to recover.

3. Other financial circumstances could also change that would affect the property division. If one or both parties lose their jobs, or if a company goes broke, that could completely change the situation. If one spouse has been a stay-at-home parent and now has to look for a job, but the economy is failing, that may create the need for lengthy spousal support (alimony).

4. Sometimes, it is the wife who has the more significant investments. She might make the same assumptions and conclusions, and then her husband could be the one losing out.

The bottom line: My suggestion is that if someone wants or needs to be divorced, they shouldn't wait around for the stock market to hit bottom or to reach the top, and they shouldn't rush into a divorce just to save on the pay out. The finances are always an issue, but other personal issues should be primary. Don't let the property division dominate your thinking to the point that you ignore or downplay the other personal issues in the marriage.

Thanks to Tim Evans of the Hattiesburg Divorce Lawyer blog who had a recent post about this topic which had the reference to the Miami Herald article (I don't normally keep up with Miami news). Tim's blog is well worth regular reading.

If You Need to Wait Because You Can't Afford to Divorce...

There is a lot of discussion going on about whether the number of divorces being filed is decreasing. Many observers say that is true because of the economy, and it makes some sense. As bad as a family situation may be, many people begin to feel that they can't afford to get divorced.

• Some people are experiencing the mortgage crisis in their lives. Home values are plunging in many areas, although not as much in North Texas. Tarrant County home values, so far, are still doing pretty well and houses are selling, but who knows for how long. Even so, it is harder to get mortgages now.

• Many people are losing their jobs. Again, although Tarrant County seems to be stronger than many other areas, unemployment has greatly increased. Everyone is eventually affected by what is happening everywhere else.

• The stock market fall has badly damaged many retirement accounts and investment portfolios. The values are down by a third to a half, sometimes more.

• With prices rising, even for those people lucky enough to hang onto their jobs, it is hard to pay for food, fuel, utilities and other necessities.

• Insurance costs are going up and coverage is falling. Health care costs are increasing. Anyone with health issues now certainly faces greater difficulty in paying for necessary services.

Given those circumstances, it's no wonder that people may be deciding to wait on a divorce until they can better afford it.

For people choosing to wait, here are some other options:

1. Get a post-nuptial agreement. Many people are familiar to some extent with pre-nuptial agreements. I have written about them before. A post-nup is like a pre-nup, only later. Texas law allows a married couple to sign a partition agreement to divide their assets and liabilities. It can also provide for how present and future income will be managed. While it is not cheap, a post-nuptial partition agreement is probably much less expensive than a divorce and it will accomplish about the same thing as a divorce as far as property division. An attorney would be needed for each side. I would suggest using Collaborative Law to work out the agreement on the best possible terms for both parties, so you would be best served by contacting Collaborative lawyers.

2. Do financial planning. This is a less dramatic step than doing a partition agreement. The couple could meet with a financial planner to brainstorm ideas to find the best way to manage their finances during the downturn and into the future. A lot of the stress people are experiencing is from uncertainty about survival now and in the future. Getting qualified help to plan a strategy may resolve the concerns and leave the parties in a better frame of mind. A certified divorce financial planner or a regular financial planner can probably help you with this.

3. Take steps to enhance your marriage. Getting counseling is a common suggestion, but it makes sense. If you feel like you can't afford a divorce, but one or both of you is miserable in the relationship, then maybe you should try to make the relationship more bearable. Sometimes a marriage retreat can be helpful. There may be some groups around that you could join. Or, you could go to individual and couples counseling. Things around the house might really improve if you and your spouse follow through with counseling. Even if your marriage doesn't survive, at least the divorce later on might be more civilized. First, contact a marriage and family therapist and give it a try.

If you are haveing serious problems at home with your spouse, but you think you can't afford a divorce, you should consider the suggestions above.

Is the Economy Affecting Divorces?

One of my favorite blogs is James J. Gross's Maryland Divorce Legal Crier. James can make a point very succinctly and his posts are usually both entertaining and enlightening. His post today certainly fits that description. I have heard the question over and over about whether the economic downturn/recession/or worse has an effect on divorces. Here is his response.

“'Are divorces going down in these hard times?' The question came from a woman at one of the holiday parties upon learning I was a divorce lawyer.

"I allowed as how many couples are opting to ride out a bad marriage because they can’t sell the house, or they can’t afford the lawyer fees, or their income won’t cover two households.

"'But others,' I said, 'find that now is just the right time to get rid of an unwanted spouse.'

“'What others?' she inquired of me.

“'Why wealthy husbands, for one, with businesses, stock, options and pensions down about 50%, may find this a good time to buy out their spouse for cash at these lower prices, expecting an eventual recovery.'

“'And trophy wives, in the face of layoffs and rumors of layoffs, may decide the right time to leave is while their husbands are still employed.'

“'I never thought of that,' she nodded, and wandered off to get some more punch."

That all fits with the observation about how some people see problems and others see opportunities.