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Financial Learning Center


Divorce and Remarriage

Separation & Divorce

Divorce and child custody issues are very difficult. The good news is that there are ways to save money and to protect your interests and the interests of your children.

What Is a Divorce?

Divorce is the legal termination of a marriage. The divorce decree is issued by a state court. The key issues are typically the division of property, child custody, and child support. Judges will seek to rule in the best interests of the child.

The entire process can be conducted in a very business-like manner, with both parties staying calm. However, the end of a marriage can be a highly charged time emotionally, and these proceedings can turn into drawn-out and expensive battles.

Separation Agreements

In many cases, the first step in the divorce process is to become legally separated. Legal separation usually involves one spouse moving out of the family home for a period of time. This is legally required in some states to obtain no-fault divorce (a divorce in which it is not necessary to prove that one of the parties has committed a crime or sin, such as cruelty or adultery). The actual length of the separation period required for no-fault divorce differs from state to state.

It is very important to clearly document the separation date, since this can affect your credit record, pension benefits, or other assets. For example, the impact on retirement plan assets can vary greatly, depending on the date you officially separate. In addition, expenses incurred by either spouse prior to the official separation date are the responsibility of both parties. The definition of a separation date differs by state, although either party can argue for a certain date.

Typically, a formal document called a separation agreement is drawn up and signed by both parties. This document spells out child custody, child support, alimony, and property division during this period. This agreement usually becomes the starting point for the divorce agreement.

The Divorce Process

The process of divorce can be similar to a business negotiation. The goal is to try to obtain what is fair for both parties, what negotiators call a win-win situation. As is the case in any legal matter, complications translate into increased expense.

All divorces, whether amicable and quick, or protracted and expensive, follow the same steps:

The Beginning

- Decision to terminate the marriage

The Accounting

- Determination of assets and debts to be divided

The Agreement

- Determine a settlement approach. Make decisions regarding child custody and support, division of property and support payments

The Waiting

- Filing papers for an official decree (Permanent order dissolving the marriage)

The End

- Receiving the decree from the court

Each state has rules on how to divide property. You can bypass the court system (and save a lot of time and money) by negotiating an agreement. A divorce that does not involve a judge deciding on property division is called an uncontested divorce. If you can reach a fair settlement, the legal costs you save can be used for your retirement, a child's college fund, or rebuilding your life. Using a mediator can help you through this process.

Before agreeing to a settlement, have a lawyer, certified public accountant, or financial professional with experience in divorce proceedings review the agreement to make sure there are no unexpected costs or pitfalls in the agreement for you. Make sure the settlement accomplishes what you want.

Coming to an Agreement

If you are not coming to an agreement easily, or you are not on speaking terms, you will need the assistance of a lawyer, a mediator, or an arbitrator. If your spouse has hired a lawyer, you should look into hiring your own lawyer. You and your spouse should never use the same lawyer. This is a conflict of interest for the lawyer, since he or she cannot effectively represent both parties in a dispute.

Carefully review the information your spouse presents.

Your lawyer, serving your best interests, will help you work out all the details of the agreement. Each lawyer will try to get the best deal for his or her client. These proceedings can turn nasty if the lawyers do not approach this task with a spirit of compromise and fairness. One party may want his or her lawyer to fight for every dollar. If you or your spouse chooses this route, you may be in for a long and expensive battle.

How Long Until a Divorce Is Final?

Assuming you do not go to trial, your divorce agreement is entered into the courts for review. The judge may review the document to make sure that it appears to be fair and that is was not drawn up under coercion. Judges usually agree to most proposed settlements. The divorce decree typically becomes final about 30 to 90 days later. In some states it might take longer, especially if you have been separated for less time than the law dictates for a no-fault divorce. The typical divorce takes about a year to settle.

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