Paths Through Divorce (5/7): Navigating Divorce- Rules, Teams, and Steps

Have you suddenly found yourself facing the prospect of a divorce? You may be wondering, oh my gosh, where do I start? It's very overwhelming with all the emotional feelings, hurt, pain, loss, everything else. There's a job to be done.

There's a process to go through and you may just be wondering. I have no idea where to start, where do I even go with this? I'm Kathy Costas. I'm a financial advisor and Certified Divorce Financial Analyst, or CDFA at EP Wealth Advisors. I help my clients with this whole process and guide them through the steps. What I tell them is, the first thing you need to do is find out what are the rules of the game in your state. Divorce is. Guided by state law for the most part. There's some that is federal, but most of the laws of divorce and the way your money is going to be divided and any income stream you're gonna get is determined by the laws of your state. So the first thing to do is find out, depending on where you live, what are the rules of the game. You may [00:01:00] live in a community property state. I'm in California. the property is de deemed to be community if it's anything earned or acquired during marriage. And it's split right down the middle, 50 50. There are also equitable division states. Those are states where it's really up to a judge to decide what is the equitable, not necessarily fair or equal division of assets. So you need to know, again, you need to know the rules of the game. Which state are you in? Is it a community property state? Or an equitable division state because that's gonna determine the outcome of your divorce and what you are entitled to. So good to know that up upfront. The other piece is for support. Now in California we call it spousal support. Some places it's alimony or maintenance, but it's essentially a payment from one spouse to another, a higher wage earner to a lower wage earner, to help them either get on their feet post-divorce, or in some cases in California. If it's a marriage longer than 10 years, there [00:02:00] is no end to spousal support, as we call it, but that's not the case in every state. So in California, again, a long-term marriage, more than 10 years, there's no end date. Less than 10 years. it's about half the length of your marriage. But other states can be much more subjective.

They, a judge can look at how much you contributed to the marriage, how much you may contributed to that higher wage earner's success. it can get very complicated. So knowing what your state says about those payments and what you're likely to receive and for how long. Very important. Then we have child support.

Now that is more uniform across the country. It's generally a formula. In California, we have something called the ex-spouse, which is a computer program that essentially combines all of the income sources, figures out the after-tax number, and then divides it based on where the kids are staying. That is more uniform across the country. but there are some variations. So first thing to do, find out what your state says. [00:03:00] What are the rules of the game? The next thing is to put together your team, figure out if you're going to do mediation. Or collaborative or litigation, find that team and add a financial person. as A-C-D-F-A, I help my clients make the best financial decisions during the worst of times I'm with them through court and mediations and voluntary settlement conferences, all of it. So as I'm with them, I'm there. to advocate and educate them. So find your team of legal professionals and financial professionals to help you through this whole process. It's likely the first divorce you've gone through. And for those of us who do this for a profession, it'll be thousands of divorces.

So take advantage of that team, as a team effort always. The other thing to do is start to hunt and gather. Gather information, knowledge is power. If you are not the spouse who typically has handled the money, start educating yourself and just becoming aware. [00:04:00] if statements come in the mail, if they come by, email, anything that really has a dollar sign attached to it, you need to start gathering that information so you, you start to build your knowledge base, especially again, if you weren't the one who managed the money. Anything really with a dollar sign attached. Anything you own, your house, investment accounts, bank accounts, retirement accounts, a business, all of those things as well as anything you owe. A lot of times in a divorce, people are very focused on the asset side, what they're gonna get. They're not so focused on what they might.

O as a couple. It's important you go on annual credit report.com. It's a website where you can see your credit report from all three agencies and find out, make sure there aren't some loans or credit cards or other debts out there that aren't yours or you didn't know about, so that you and your spouse can manage that side as well through the process. And then it's about income and. Bench, figuring out what's coming into your household and what are you [00:05:00] spending on a monthly basis. Luckily, a lot of bank apps will do that for you. They'll help you classify what you're spending whether it's on the house or utilities or food, all of those things. Take advantage of your technology when you're gathering this information. So in, in that overwhelming time, I think it's always helpful to have some steps laid out so that you just don't feel completely lost. So these are a couple of steps to follow, to start you on your way to managing the process.