For Some, COVID-19 Togetherness Means Thinking About Divorce
Take a breath, and perhaps take an interim step and think about finances.
Apr 20, 2020
Virtually everyone is home. In some households, both spouses are trying to work remotely while caring for children and home schooling in close quarters. Maybe one or both spouses has also been sick, which in this pandemic adds many scary layers to an already intense situation. Maybe you are living with a narcissist or someone with another personality disorder; this may make these times even more stressful.
In many families, there are general anxieties about the economy, or worse, very specific worries about how to pay for food, rent, and utilities because one or both spouses have lost a job suddenly and without any severance whatsoever.
It feels like too much to bear.
This forced togetherness, combined with seemingly countless health and economic stressors, is enough to make anyone consider a drastic life change.
For many couples, that life change could be a divorce.
Perhaps this is a path you had considered previously, and now with these added stressors, you realize that the time has come. There are many couples who were on the precipice of divorce before this pandemic roared into our lives. For them, this crisis may have put things in perspective.
IMPORTANT: It is never wise to make life-changing decisions when under extreme stress.
This article is for those who were thinking about divorce long before they had heard of “coronavirus” or “social distancing,” and they hadn’t yet decided what to do or thought they could wait it out.
It is often one of the hardest decisions a person will ever make: whether or not to divorce your spouse.
And while it might feel secondary to the issue of why you are debating divorce in the first place, it is crucial to understand the impact a divorce will have on your financial standing, before you make these “wishes” official, particularly if you are a parent.
There are three financial areas you need a clear understanding of prior to embarking on a divorce:
- Expenses (present and future)
- Assets/liabilities so that there can be an equitable distribution of both assets and liabilities
You should try to have as much knowledge about your and your spouse’s income and current expenses as possible so that you can look ahead to potential future plans and expenses for the children. You should attempt to understand the financial position you will be in if you divorce, and also, empower yourself to make certain you arrive at the best financial arrangement you can.
This is not always possible, but if you can figure this out before asking for a divorce, it will make the divorce proceed more smoothly. If you can’t, your attorney will help you along the way.
Knowing your and your spouse’s income is very important. This includes wages, anticipated cash and equity bonuses, legal agreements or arrangements if your spouse is involved in a partnership, for example, and any trust fund/family money that might be relevant, among many other things.
A thorough review of your family’s most recent tax return will be a good place to start if you do not have a clear understanding of your family’s financial picture. A tax return will provide an understanding of income and to some extent it may provide insight about certain assets.
Having access to statements for retirement accounts, 529 education savings accounts and other investments is also important, as these will be important to have as you work toward a financial arrangement in divorce.
If you are not familiar with these documents because your spouse has always “handled the money,” it will be important to ask your spouse for the relevant information (unless you are in a situation in which you feel yours or your children’s safety might be at risk). If your spouse won’t provide that access, then this may be a signal that you need to retain a tenacious advocate who knows how to gain access to this information. Remember, you are entitled to this information.
You also need a full understanding of your liabilities – monies that you or your spouse owe to anyone. This would include the mortgage, any outstanding loans including student loans or car loans, and outstanding credit card debt. One way to get a full accounting of your own debt is to run a credit report.
Current monthly expenses
Make a list. You ultimately will need a full accounting of your and your children’s monthly expenses. A complete understanding will help inform the payor parent during negotiations of how much child support is necessary to maintain the children’s lifestyle and inform the payee parent of how much child support and other income is necessary to support the child(ren) without disrupting their lifestyle. Remember however, that there will now be two households and there likely will be some adjustments.
Don’t forget items such as child care while a parent works, medical/health/therapeutic/dental/ orthodontic expenses, educational expenses which can include private schools, tutoring, college expenses, as well as any 529/college savings accounts, extracurricular activity expenses and health insurance.
All should be itemized and considered separately as they may be classified as “add-on” expenses.
It will also be important to start to think about where you will live with your children and whether or not you should remain in the family home. There may be capital gains ramifications later in a sale and brokers fees that the parent residing in the marital residence will be responsible to pay if that parent decides to buy out the other parent’s interest in the marital residence. There will also be expenses that go along with living in any home that should be considered.
Anticipated future expenses
Make another list. This one should include anticipated educational expenses including private school and college, extracurricular activity expenses including the costs of uniforms, travel to events, concerts, etc., as well as required contributions to any education-related savings accounts and management of trusts that might be set up for the children.
It is also important to know that custody will impact child support. Keep in mind that if both parents have 50/50 access — meaning an equal division of overnights with the children — this may decrease child support paid by the payor and decrease support to be received by the payee. Additionally, with a 50/50 schedule, the parent who earns more will likely be paying support to the parent with the lesser income. If one parent has more than 50% of access, that parent will usually be the payee with respect to child support.
And, unless agreed upon otherwise, child support in some states ends at 21 years of age, even if the child is still in college. It is important to remember to ask for a room and board credit for the college years if you are the payor, as otherwise, you are paying twice—once for room and board, twice when you pay the child support and your child is living and dining at college.
To inform yourself as to how assets and liabilities are divided and how child support and alimony are calculated, it will be important to meet or Zoom/Skype with a professional advisor to have a personal financial assessment. Be sure to choose someone who is knowledgeable about finances.
529 accounts are assets that are specifically earmarked to pay for your children’s college or even private school. Parents must understand if there are 529 accounts to pay for college and calculate how much you need to pay for college for your children after using the monies in the 529 accounts. (The Court has the authority to order a parent to pay college expenses.)
Of course, there are so many things to consider when planning a divorce, and your finances might pale in comparison to some of the various emotional issues you are working through.
Take a breath and get professional guidance from a divorce financial analyst and matrimonial attorney if you need it as many are working virtually.
But most important, take care of yourself and your children in these stressful and unusually uncertain times.
This article is not meant to replace legal or mental health advice as each situation is unique. Please find a professional in your area to help you with these matters.
Originally published April 20, 2020 in Psychology Today.