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When people end their marriages, they often discover that many of their beliefs about divorce and how it can affect their finances are just not correct. Divorce attorneys often must help their clients separate the myths from the realities. The costs of divorce and dividing your marital assets can be considerable. If you decide to end your marriage, it’s important to have a realistic view of how it will affect your bank account. We’re here to dispel 20 commonly held myths so you don’t get caught by surprise.
1. Myth: Keeping money in a separate account will keep your spouse from getting a share
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Although many people believe this to be true, it’s definitely not. “This is an old wives tale,” said Florida divorce attorney Eric N. Klein.
When going through a divorce, you have to complete a financial affidavit, swearing that all of the information is accurate, he explains. All assets accumulated during the marriage are subject to an equitable distribution. That means money that either spouse has saved must be disclosed at the time of final judgment.
2. Myth: Women will automatically win custody of kids
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The notion that women automatically win custody of children simply isn’t true, says Klein. “There was a point in time where that may have been the case, but no longer.”
Custody issues are important, and they can affect your future financial commitment. According to legal issues publisher Nolo, no custody laws in the U.S. give mothers a preference or additional rights to custody of children. The “tender-years doctrine,” a court presumption that mothers are the more suitable parents for children under 7, was abolished in most states in 1994, according to this New York Times report. That means men, in theory, have an equal chance of winning child custody in a divorce suit.
Despite equality under the law, a disproportionate share of women do end up winning child custody. According to a U.S. Census report issued in 2013, only one of every six custodial parents are fathers.
3. Myth: You don’t have to worry about your spouse’s credit card debts
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If a credit card is in your name as well as your spouse’s, both of you are on the hook for repayment, says financial planner Jean Marie Dillon.
“If cards are held jointly, the spouses are jointly responsible for the debt,” she said. “Prior to a divorce, it is not uncommon for the spouse of lesser means to go on a spending spree and leave the other spouse holding the debtor’s bag. If the debt goes unpaid or delinquent, then both spouses take a hit on their credit scores and that hit will remain after the divorce.”
4. Myth: Women never pay alimony
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While men once were the principal breadwinners in marriages, the nature of the American family and its finances has changed. In many relationships, the woman now is the top earner.
“If the wife is the breadwinner and the husband has a lower paying job and/or is the custodial parent of the children, it’s quite common for women to pay alimony,” said Justin Wood, a mediator and arbitrator in Oklahoma.
5. Myth: You can judge the quality of divorce attorneys by their fees
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While people tend to get what they pay for when it comes divorce attorneys, the difference in hourly rates isn’t a good indicator of the quality of their work, says Colorado attorney James Cordes. He recommends that you look for a divorce attorney you can relate to who will work to get you the best result without overcharging.
6. Myth: It will help your case if you can show your spouse cheated
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You may feel outraged if your spouse commits adultery, but your moral indignation likely won’t help you when you divide your assets. Most states have some type of “no fault” divorce law, says Ken McRae, a family law and divorce attorney in Kansas. Generally, this means the court doesn’t concern itself with who caused the breakup, he says. “As a result, an affair will not usually impact the division of assets or debts.”
7. Myth: The house is the biggest asset at stake
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Sometimes the value of vacation homes, individual retirement accounts and businesses exceed the value of primary residences. “It all depends on the people and how they spent, saved, or invested their money,” said Wood. “Nothing should ever be taken for granted, and questions should always be asked, and evaluations made.”
8. Myth: You have plenty of time to remove your ex from a life insurance policy
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People who delay removing an ex-spouse as the beneficiary of a life insurance policy following a divorce are making a big mistake. No one knows when their life will end. If you die before you change your policy, your ex likely will receive your life insurance benefits, even if you have remarried since the divorce.
After a divorce, you should review your life insurance policy and any account where you’ve named a beneficiary, says McRae.
“Often people will make a beneficiary designation and forget about it,” he said. “You may have forgotten to add your younger children, or you may still have ex-spouses listed as beneficiaries.”
9. Myth: If your ex doesn’t pay child support, you don’t have to allow visitation
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Two wrongs don’t make a right. While it may not seem fair, courts typically enforce child visitation rights, even if there is a dispute over child support. As explained by the Colorado Department of Human Services, a parent’s right to visitation exists independently of the payment of child support. Your ex may be a deadbeat, but he or she still has the right to see their child.
10. Myth: It’s best if you delay your divorce until your children are grown
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Many people put off a divorce for the sake of their children, but Klein thinks that’s a “big mistake.”
“Do you really want to raise children in a house where there is no love and affection between the parents in addition to the animosity, anger and arguing?” Klein asked. “In my personal opinion, it’s better to divorce so that the children are not conditioned to believe that constant arguing is a way of life as part of a marriage.”
11. Myth: If your spouse doesn’t know about your assets, he/she can’t claim them
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When it comes to disclosing your assets, it’s best to be honest. McRae notes that most divorce settlement agreements include a provision that provides that if one spouse hides an asset and the other party subsequently finds out about it, the entire asset if forfeited.
If you place $100,000 in a hidden account and your ex learns about it, they could get the entire amount, McRae says.
“Also, there are some high-profile cases of people spending very long periods of time in jail for contempt of court when they refuse to reveal assets the court believes they have hidden.”
12. Myth: It’s important to fight for everything you’re entitled to receive
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Divorcing spouses can save themselves time and money if they agree to divide their assets in a spirit of compromise.
“People will fight over things they do not really want or need because emotions can be overwhelming,” said McRae. “Sometimes it is out of a desire to hurt or deprive the other party, sometimes it is because a particular item has a memory attached to it. I generally recommend focusing on the three things you most want out of the divorce and being willing to compromise on other things in order to achieve those top objectives.”
13. Myth: You’re always better off settling out of court
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While it’s usually less expensive to settle a divorce amicably, there are times when a trial is necessary. In some cases, one spouse may want to settle the case, but the other won’t cooperate. If you believe your marital partner is deliberately hiding wealth, you may need to bring your case before a judge in order to get an equitable distribution of assets.
14. Myth: If you have sole custody, you are free to move out of state
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In general, a child can’t be moved out of state by a custodial parent without permission from the court that issued the custody order. That means a parent with sole custody may not be able to accept a job that would take them and their child to another part of the country. The noncustodial parent may oppose such a move.
Having custody doesn’t negate your ex’s right to see their child, Wood explains. “Usually, you must remain within 60 miles of each other, unless agreed or awarded otherwise,” he said.
15. Myth: You should make major purchases before you divorce
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People often believe they should make big purchase — such as a new car — before they file for divorce. Their goal is to make the purchase before the court places a restraining order on large expenditures, to prevent them from dissipating jointly held assets. In reality, the court likely will make sure that your spouse is properly compensated for any large expenditure you make using shared assets. They even could end up owning an item you bought for yourself prior to the divorce. It could be argued that you made the purchase “as means to defraud the other party out of money for self-gain,” Wood said.
16. Myth: Most divorce cases go to trial
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In reality, trials are the exception rather than the rule. The vast majority of divorcing couples find it less costly to resolve their disputes out of court, says McRae.
17. Myth: Both parties must agree in order to divorce
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You don’t need to have your spouse’s permission to get divorced, although it’s easier and cheaper if you do. If one spouse declines to sign divorce papers, the spouse seeking the divorce will need to obtain a contested divorce by filing a petition in court.
“You may have to have a trial,” said McRae.
If the case goes to trial, the court will decide on all settlements and divisions of property. Having a contested divorce means you likely will be spending more money on legal fees.
18. Myth: Wives are better off if they get the house
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While there is security in owning real estate, seeking a home in a divorce isn’t always the right financial move. If there is an outstanding mortgage and the wife/spouse can’t afford to keep up the monthly payments, she could end up losing the property to foreclosure. It’s also important to be aware that real estate values fluctuate. If a wife decides to sell the home during a drop in the housing market, she could end up receiving less money than the home was worth when she won it in the divorce settlement.
19. Myth: Both spouses will enjoy the same standard of living after divorce
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No divorce agreement can guarantee that you’ll have the same standard of living after you separate. That’s because it’s more expensive to support two households than to share expenses with someone else. In some cases, both divorcing spouses may see their standards of living decline following a divorce.
20. Myth: Private investigators and forensic attorneys are too expensive
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Hiring an investigator or forensic attorney to find out more about your spouse’s finances can be money well spent, if a spouse is hiding wealth.
Before you can get a fair division of assets, you need to know exactly what they are. If you’re dealing with a spouse who is deceptive, this can be a challenge and hiring a specialist may be necessary.
Often a superficial examination of assets can leave a lot of money on the table, says Cordes.
Are you or someone you know on the verge of divorce? What are your questions or suggestions? Share with us in comments below or on our Facebook page. Also, be sure to share this post with people you know who may be needing some advice.