Saving Money During the Divorce Process

There are ways you can save money in the divorce process.  However, you must be careful that if you save too much money in the short term (by not getting good advice), it may cost you dearly in the long term.

1.  Use your brain.  Don't let your hurt and disappointment drive you to take rash decisions in retaliation.  

2.  When advised to do things that will upset or damage your spouse at the beginning or during the divorce process, ask, "how will this affect my ability to achieve my desired outcomes?" and "what will it cost, both in financial and emotional terms, for me to do this?"  For example, does it really make sense to file a temporary injunction against your spouse if there are no real grounds to do so?  Do you really need to take $10,000 from the joint bank account and put it into your own account without getting agreement.

3.  As one attorney told me, if someone tells you something about the law that does not make sense, then it is probably not true.  For example, if you move out of the house where your spouse and children are, but are still keeping contact with your children, you will not be charged with abandonment. 

4.  If you can settle your case without retaining attorneys to represent you, you will save a lot of money in professional fees.  You should at least consult with an attorney (sometimes called unbundled legal services) so that you know what your rights and obligations are.  

5.  If you get advice from a family law attorney or a Certified Divorce Financial Analyst so that you understand the short and long term financial implications of your potential agreement, then you should be able to make better, more informed decisions and not have nasty surprises one, two or more years down the road.

6.  Get all of the documentation together early  that you are required to provide by the court and have it organized.  If you believe you have a claim for non marital, separate property, then get the evidence you need to support your claim, unless you spouse agrees with your claim without the documentation.

7.  Don't try to hide assets, or "forget about them".  It will cost you a lot of money in "discovery" for the attorneys to uncover them.  If it is not found during the course of the divorce, but is suspected later, your spouse can reopen the case - more attorney fees!

8.  You have learned during the course of your marriage how to "push the buttons" of your spouse.  This is not the time to do it.  Think before you speak.   The kinder that you are to each other during the process, the less money you will spend on professional fees and the more likely you will come out with an agreement that you both think is fair. Before you speak, ask yourself these questions.  If the answer is No to any of them, STOP.    Is it truth?  Is it necessary?  Is it kind?

9.  If you need cash, you can often get money from your retirement funds after the divorce without paying the 10% penalty in addition to the normal income tax on the early withdrawal.

10.  Alimony is normally tax deductible to the payor and taxable to the recipient. Child Support is tax neutral.  By increasing alimony you can sometimes save taxes overall and reduce child support.  Both of you could be better off.  Because Child Support is always modifiable by the Court, when alimony ends or reduces, then child support may go up.

Different approaches to divorce

Many people advise their friends and relatives when they are facing divorce to "go get an attorney".  This is understandable as often the emotions are running high, dreams and hopes have been dashed, anxiety is high about what will happen to the children and finances, trust and communication may be at an all time low, etc.  However, often it is sensible to do some research before rushing off to "have your day in Court".

While there are many attorneys who will advise their clients on the different approaches to divorce (mediation, collaboration, cooperative, litigation, consultation v representation) and help them to work through their options and the costs and benefits of each (they have an ethical obligation to do so), unfortunately, there are attorneys who do not talk about options other than litigation and thus sell the potential client on a retained representation for litigation.  While there may be some situations that may only be resolved through a litigation approach, the vast majority of cases are not settled in the court room because the parties agree a settlement without the judge being involved.

Attorneys can be hired in two different ways.  They can represent you in your matter, or you can consult with them.  If they are representing you, they are managing your case and have a responsibility to you to help you achieve your objectives.  You will usually need to pay them a retainer if they are representing you.  If you are consulting with them, you are seeking their advice, but you are managing your own case.

Litigation may have benefits, depending on your situation. Your  attorney will take control of your case to gather all the information to make sure that your spouse is not hiding or misrepresenting anything, advise you on what you can expect as an outcome, help you to understand what is going on in the legal process, and represent you to your spouse, his/her attorney, and the Court to try to achieve your objectives in the divorce.  If there is abuse, a large power imbalance, complicated issues, lack of communication and trust, then often litigation is the only way to get the divorce finalized.

Litigation also has costs.  The very nature of the litigation process, the attorney's ethical and professional  responsibilities to you as the client and to the court can increase costs rapidly at the beginning of the case in order to collect all the information that both attorneys need to get the case started.  If one of the attorneys (or their client) wants to be difficult (like filing a restraining order with little basis), this can escalate the conflict and the costs even more.  The very nature of the legal adversarial process, while designed to resolve conflicts based on law (and some say to find the truth and justice), can damage the relationship between the parents so much that it makes it very difficult to co-parent effectively.

For many people, however, they have made a decision to divorce, have put a high value on minimizing the damage to the children in the short and long terms, and wish to not damage their relationship further through the divorce process. Even though there may be some trust and communication issues, with some help they can work through their issues and come up with an agreement that works for them and their family.  They can be non-adversarial and try to reach an agreement that is satisfactory to both of them, rather than an "I Win, You Lose" result.  Just having this mindset when approaching divorce can save tens of thousands of dollars in professional fees.

Many people find that starting with a mediation process, in which they work with a neutral mediator and each party has an attorney with whom they are consulting, can be a highly effective and a relative low cost way to reach an agreement on even very complicated situations. During mediation, the mediator helps the parties to find their own solutions that will work for them.  Their attorneys may (but not necessarily) be present in person or by phone.   At minimum, the attorneys should be consulted close to the beginning of the case after the financial information has been exchanged between the parties, and closer to the end of the process when agreements are being discussed, but not yet finalized.  They should also review the Memorandum of Understanding (your divorce agreement) to make sure that it is written to reflect your understanding of the agreement.  (Note that this type of mediation is often quite different than a settlement conference, in which an attorney-mediator or retired judge will, in effect, evaluate your case and tell you what a judge would say if it went to court.)

If mediation is not successful in reaching a full agreement, then the parties can increase the involvement of attorneys through collaborative, cooperative or litigation models. 

If more involvement of the attorneys is needed by the clients (who perhaps need more support due to a power imbalance or lack of trust), they can enter into a collaborative agreement with their attorneys. Collaborative divorce involves the attorneys agreeing with their clients that they will not represent them in Court, and will work in a collaborative and non adversarial way with the other party and their attorney.  Cooperative divorce is similar except that the attorneys have not agreed that they cannot represent their clients in court, but will try to work in a cooperative way to reach an agreement.  You can find out more about collaborative divorce at www.denvercollaborativedivorce.org. 

Who is Steve McBride?

Greetings!

I am a Divorce Mediator and Certified Divorce Financial Analyst (sometimes known as a divorce financial planner).  I am also building a mediation practice focusing on elder care and other senior issues.

While most of my divorce work involves helping couples work through their divorce settlement (both financial and parenting) in a dignified way, I also act as the financial neutral on collaborative divorce cases and as the financial expert on litigation cases.  For more information, see www.divorcefinancecolorado.com.

The development of my elder care mediation practice derives from personal experience as a caregiver for my mother-in-law when she had Alzheimer's, as well as dealing with a difficult sibling dispute about the care of my mother after her stroke. This area of my practice deals with a wide range of elder issues, including housing and living arrangements, caregiver arrangements, financial management, estate planning, guardianship, elder care transitions and disputes with nursing homes and residential care facilities.  For more information, see my upcoming web site www.eldercaremediation-colorado.com.

I am a Professional Mediator recognized by the Colorado Council of Mediators and Mediation Organizations (CCMO), a Certified Divorce Financial Analyst, Member (and former board member) of Colorado Collaborative Law Professionals, Member of the International Academy of Collaborative Professionals, a board member of Colorado CASA (Court Appointed Special Advocates) and a member of the Denver and Boulder collaborative law practice groups. 

I am a husband, father to Ian and Katie, "bonus dad" to Emily and Annie, grandfather, musician, and artist.  


My wife, Jennifer, is a Vice President of Horan and McConaty (www.horancares.com) where she is Director of Grief Support and Community Education.  She is also the Founder of the Heartlight Center, a 501(c)(3) focusing on grief support and professional grief education (www.heartlightcenter.org).


I played rugby for many years in the UK, and upon returning to the US coached the Denver Harlequins men's team and Cherry Creek high school girl's team.

Before working in the mediation field, I has a successful career in management consulting, where I was fortunate to help organizations such as Black and Decker, International Paper Company, American Greetings, J. Walter Thompson Advertising, British Gas, Singapore Telecom, BAT, Sun Microsystems, National Westminster Bank, Allied Irish Banks, and the University of Essex. I started my management consulting career with Pittsburgh-based H.B Maynard & Co (one of the oldest management consulting firms in the US, if not the world), and was a consulting partner with Robson Rhodes Chartered Accountants and CEO of Aspen Management Consultants, both in the UK. Most of my work focused on how to improve the performance and productivity of people in organizations through better people management. When I returned to the US in 1999, I worked with what is now DeNargo Capital, a private equity firm owned by my good friends Tom Heule and Pal Berg.

Feel free to contact me at 303 867 1400 or at steve@stevemcbrideconsulting.com.

Thanks for visiting my blog.

Steve