Throughout my career, I’ve seen clients enter the divorce process with assumptions that
greatly impact their expectations and often end up significantly increasing costs.
Some misunderstandings seem perfectly reasonable, but they can lead to unnecessary conflict
and expense.
Here are three common divorce financial misconceptions:
- A large marital estate means there’s plenty of money to go around, so dividing assets
should be easy.
- A small marital estate means there isn’t much to fight over.
- Mediation will be less expensive and less combative than going to court.
Each of these assumptions overlooks some important facts.
Dividing Assets in a High-Net-Worth Divorce
It might seem reasonable to assume that couples with a multimillion-dollar marital estate
would have little trouble reaching an agreement. With so much money involved, surely there’s
enough to satisfy both spouses. In reality, dividing substantial assets can be surprisingly contentious.
Divorce often brings years of unresolved emotions to the surface. For example, in marriages
where one spouse is the primary wage earner and the other cared for the parties’ children,
each may have a very different view of what they contributed to the relationship and thus what
each should receive upon dissolution.
The higher-earning spouse may feel their financial contributions and sacrifices associated with
the same went unrecognized. Meanwhile, the other spouse may believe their contributions to the household and family and sacrificing his/her own career gave their partner the opportunity to pursue and excel at a demanding career and build wealth. Both may feel they deserve what
they believe is a “fair share” of the marital estate, but their ideas of fairness can differ
considerably.
In addition, even with a large marital estate, both parties may not be able to maintain the
same or similar lifestyle without disproportionately dividing the estate and/or significant
support. A couple may have substantial assets but also significant expenses and different
financial priorities for life after divorce.
Takeaway: A large marital estate doesn’t necessarily make divorce easier. The complexity of the
assets and each spouse’s financial needs can make reaching an agreement more difficult.
The Financial Risks of Fighting Over a Small Estate
It’s easy to assume that couples with relatively few assets won’t have much to argue about. But
when financial resources are limited, every dollar can feel especially important.
Even a relatively small disagreement can turn into a prolonged dispute if neither spouse is
willing to compromise. The problem is that divorce itself is expensive. Legal fees and other costs
can quickly consume a significant portion of a modest marital estate.
Spending thousands of dollars to dispute a relatively small amount of money may leave both
spouses with less than they would have received through an earlier settlement. That doesn’t
mean giving up rights without careful consideration. It means weighing the potential benefit of
continuing a dispute against what it will cost to resolve it.
Takeaway: When the marital estate is limited, the cost of continuing a dispute can quickly outweigh what’s at stake. An experienced divorce attorney can help clients weigh those trade-
offs before deciding whether a particular asset/issue is worth pursuing.
When Divorce Mediation May Not Save You Money
Mediation can be an effective way to resolve many divorce disputes. When it works well, it can
reduce expense and conflict and give spouses more control over the outcome.
However, mediation isn’t the right fit for every couple. Both spouses need to be willing to
negotiate, communicate openly and compromise. Trust and full disclosure are also essential.
If one spouse is withholding information or the parties cannot have productive discussions,
mediation may not be an effective way to resolve their differences.
Cost is another consideration. Although mediation can be less expensive than litigation, it isn’t
automatically the cheaper option. The mediation process can stretch over several months, with
fees accumulating along the way. If mediation ultimately fails, the spouses may still need to
litigate their disputes, adding another layer of expense.
Takeaway: Mediation isn’t automatically less expensive than litigation. The total cost will
depend on how the mediation unfolds and whether the couple can reach an agreement.
I often comment to clients that “you have just one life to live.” You need to decide
how you desire to live it and whether the issue(s) in dispute are worth the time, energy
and emotion.
I use my 30-plus years of experience as a family law attorney to navigate my clients through the complex and often emotional divorce process. I work to provide them with the knowledge and information necessary to make informed decisions that enable them to move on to the next chapter of their lives.
It’s important to work with an attorney who will advocate for an equitable settlement and
protect your financial interests. Just as important is having someone who can help you
recognize when the pursuit of a particular outcome may cost more than it’s worth.