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Financially preparing for a divorce

The definition of a divorce highlighted by a wedding ring.

TEXT OF INTERVIEW

TESS VIGELAND: We've gone a couple of weeks now without hearing about it being the "most wonderful time of the year." So let's get right to the not-so-wonderful part of the year. January is considered the busy season for divorce attorneys. And as the economy returns -- somewhat -- to normal, the American Academy of Matrimonial Lawyers reports an uptick in clients wanting to end their marriages.

Los Angeles family law attorney Kelly Chang is here to talk money, marriage, and the dissolution thereof. Welcome.

KELLY CHANG: Thank you. It's good to be here.

VIGELAND: What is it about this time of year that encourages people to take that first step toward ending a marriage. Were they just hoping to get through the holidays?

CHANG: Yes. There's a lot of that. And it's also the same reason you see long lines at the gym. It's New Year's resolution to be single.

VIGELAND: So much of this is circumstantial based on the individual lifestyle, but what does the average divorce cost?

CHANG: Well, it really depends. If you hire a divorce lawyer, they're going to bill you by the hour. You can do it on your own for relatively cheap. So it really depends. It's kind of like a roof -- you can do it for cheap or you can hire a professional contractor to do it for a lot more.

VIGELAND: Let's talk a little bit about how people can prepare themselves for this happening. What should each party start doing with their finances?

CHANG: Generally, I see in a couple, in a relationship, somebody assumes the total responsibility, leaving the other person in the dark. So if you're the person in the dark, I would get out of the dark. Find the latest statements -- they're mailed the house or you could call the bank. What matters, if you don't have a pre-nup, is what is acquired during the marriage and that includes credit card debt.

VIGELAND: What do you find in terms of the cost for trying to get a settlement between yourselves versus going to court?

CHANG: Much better.

VIGELAND: Court has to be more expensive.

CHANG: Everything costs money, so if it takes up too much time, it's costing too much money. So if you can reach a settlement agreement, do it on your own. It saves money.

VIGELAND: What do you find in terms of couples being able to do that. Is there a ratio of amicable to not amicable divorces?

CHANG: It's interesting. I think in the past few years, I have seen a rise in more amicable behavior in the divorces and it's probably because people can't afford to fight.

VIGELAND: Ah, because of the economy?

CHANG: Correct.

VIGELAND: Because I have a divorce attorney in the studio with me, I do have to ask about your thoughts on pre-nups. Based on your experience with couples going through a divorce, does it help? Does it make things easier or worse?

CHANG: I think it makes things much easier. Get a pre-nup. Marriage is grand. Divorce is twenty grand. Get a pre-nup. Get a pre-nup. I don't care if you don't have anything. You have to come in. If you have a 401(k), half of that could be belonging to your spouse, whatever is accumulated during the marriage. You have to protect yourself.

VIGELAND: Kelly Chang is a family law attorney here in Los Angeles, and we've been talking about January as a big month for, unfortunately, divorces. Thanks for coming in.

CHANG: Thank you, Tess.

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If a couple is considering divorce, it is my observation that they postpone commencing the process as the Christmas holidays/winter break approach because the end of the year focuses on the family, children, and most people are too stressed getting through the holidays to do anything else. With the coming of the New Year, those that have been delaying the inevitable are more likely to start their divorce. Additionally, with the downturn in the economy and out-of-court options (mediation, collaborative divorce, cooperative divorce, etc.) becoming more widely known, more couples don't want to do battle in court. More couples are aware of the options that do not have the same detrimental impact on their children, their finances, and allows them to make the decisions for their family transition. For instance in the collaborative divorce process, a financial neutral (financial planner or accountant), a child specialist, and coaches (mental health professionals) are part of the divorce team as well as the lawyers, with each member of the team doing what they do best. That way the couple can best decide what goals they wish to achieve through their divorce. The hope is that the couple and their children are psychologically healthier, stronger, and better informed than when they began. Aditionally, husband and wife have been guided to achieve their goals and to make fair and realistic financial decisions. Even in the mediation process where the couple works with a neutral facilitator such as a family lawyer, a neutral accountant or financial planner often becomes part of the process to assist with evaluation of assets or to guide the couple in making some of the hard property decisions such as should the home be sold or kept by one of the spouses. The result is that couples more often save a lot of money, make better decisions regarding their children and property, and are assisted to transition faster when they explore out of court options.

I've always considered marriage as a matter of actually joining with the person you're getting married to. So hedging one's bets with either a "pre-nup" or with divorce insurance isn't really getting married, is it. If you want to hedge your bets, why get married at all? Unless it's strictly a business arrangement like helping someone get citizenship or obtaining health insurance coverage, in this country at this time there's no reason to why two people couldn't just live together if they're so afraid to commit. I hear ideas like divorce insurance and I think, are we all just incredible suckers or do people reallyl not know how to be married anymore?

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