This article originally appeared in CorporateLiveWire’s Family Law Expert Guide 2023 Newsletter, December 2023.
The following advice is gained from my many years practicing divorce law in California. Many, if not all, of the myths, tips and steps I address will apply in whichever state your U.S. divorce takes place.
Myths (common misunderstandings about divorce and marital property)
Myth #1: We are living apart so my money’s mine.
Answer: Physically separating does not determine when the community (or marital property rights) end. You likely need to make a clear-cut statement to your partner “our marriage is over” and in many states, file and serve a first paper, before your marital earnings stop.
Myth #2: Holding my earnings in a separate account means they are mine
Answer: Title does not determine ownership of your earnings. The community property system will govern regardless of title, meaning your earnings are joint earnings with your spouse.
Myth #3: We can just ‘walk away’ from each other (the ‘easy’ divorce).
Answer: You cannot keep financial facts hidden. You are obligated to fully disclose to assure that each spouse makes informed decisions about how community property (or marital property) is to be divided. Your divorce agreement needs to be in writing, signed by both parties – but only after comprehensive financial disclosure.
Myth #4: One process suits all
Answer: Be wary of any professional who advises there is only one method to obtain your Divorce – or that one method is far superior. Mediation, collaboration, litigation are different methods, and each has its place – its benefits and its potential pitfalls. Nor is one method always less costly.
Myth #5: My attorney can handle it for me
Answer: You need to be a partner with your attorney in your divorce case. You will be needed to provide information, coordinate strategy, testify at depositions and in court, and sign statements under oath. You must put in the time for this major financial and emotional transition in your life.
Tips (to effectively work with your divorce attorney) and, in the process, help keep their bill lower
Tip #1: Provide the information requested:
- Provide it in organised fashion – chronologically, by account, or asset.
- Provide it via the method your attorney requests (e.g. pdf, not screenshots; using drop box or a shared file).
- Provide it promptly.
Tip #2: Don’t hold back facts
Sometimes people are ashamed of their conduct and tell incomplete versions of events:
- that is hurtful, not helpful.
- your lawyer is a confidant; you have a privilege.
- the best strategy is crafted when your attorney knows the full description of events, whether financial, or personal regarding your and your spouse’s behaviour.
Tip #3: Be consistent
You will be required to make representations under oath, stating that facts are true. This is a necessary part of the divorce process, whether in writing, or orally in court or at depositions. You will participate, oftentimes, in a formal “discovery” process.
You will need to tell the same, and complete version in all contexts, or else you look untruthful and are not believed. So, take the time to prepare; review and gather complete financial information, review notes, records, when you make your statement. You don’t want to be required to revise it because you failed to ‘recall” something.
Tip #4: Set aside the time in your life to devote to the divorce case
Make the time to gather information, write out information, convey information; prepare to testify. Remember, you are a partner with your attorney in this process. Any case involves effort and preparation – and practice for testifying in court if that is your situation.
Helpful steps prior to divorce starting up
Step #1: Prepare a marital history
Both a personal and financial history, in writing, can be extremely helpful to your attorney to understand the relevant facts and conceive the appropriate legal theories to present, or negotiate, your divorce case.
- A personal history consists of dates and significant events, marriage, moving, having children.
- A financial history tells the ‘story’ of your property ownership and that of your spouse:
- what did you own coming into the marriage;
- what major financial transactions occurred during marriage: such as job changes, home purchases, inheritances and gifts.
Step #2: Make a budget
Know what you are spending on average- (e.g., gather costs of replacement housing, insurance, etc.)
Step #3: Gather and scan/copy all financial records
You don’t want to leave these behind, and you want to have them available (and organised) for your attorney. This process may also include scanning photographs.
Step #4: Authorise Your professionals (accountants, business managers, therapists, etc) to speak with your attorney
Prepare an email introduction and authorisation, and sign requisite written releases your professionals would like.
Step #5: Contact credit card companies of separation
Step #6: Inventory and photo/video tangible items (e.g. furniture) as you may be called upon to leave, or plan to move out
Step #7: Plan for “temporary restraining orders”
Once a filing occurs, California, and other states, have restrictions on transferring property changing insurance and retirement plan beneficiaries, or taking minor children out of state. California has a prior notice requirement if you are terminating a joint tenancy, or a trust. You should consider with your attorney what changes you could appropriately make before a filing occurs. For example, in an appropriate situation, you might want to change a beneficiary of an Individual Retirement Account from your spouse to your children.
You may want to sever title to joint tenancy accounts (that automatically go to a spouse if you die), so that nothing automatic happens and the new will you write will distribute that property to your children or other individuals you now want to inherit.
It might be an appropriate time to change the beneficiary of privately owned life insurance in whole or part.
You need to discuss these changes with your attorney, so they make financial sense in your case and how they may impact your divorce case.
Step #8: Once the case starts
If you are concerned about the other spouse making beneficiary or other “pre-filing” changes, there are specific notifications that can be given to preserve your beneficiary status which your attorney should know about. There is also the ability to record a notice against real property (Notice of Pendency of Action) that gives notice to third parties of your ownership claim, even if a property title is not in your name.
Post-script: Prenuptial agreements:
The “ultimate” in pre-divorce planning is to plan at the outset of marriage with a prenuptial agreement. Although it has unsavory connotations as not “romantic”, in fact a prenuptial agreement has many benefits in the event of a divorce, or unexpected death:
- They encourage a conversation with your fiancé about your spending Preferences – Are you a saver or spender?
- They educate you about how California (or your state of residence) marital property laws would apply to your financial affairs during marriage, and then make informed choices as to what you want.
- You can plan for the funds you would like disposable to each partner, for example, control over certain spending decisions during marriage.
- You can plan for flexibility in investment of joint funds, or which of you is free to make certain decisions about those funds.
- You can avoid future disputes over the terms of your divorce (or disputes with heirs).
They can include generous terms to provide for a surviving or divorcing spouse when there is an inequality of resources, such as gift giving during a marriage, leaving a home to a spouse on death, assuring financial security with life insurance.
So, consider the pre-divorce planning tool of a prenuptial agreement, making sure it is drafted by an experienced family law attorney in your jurisdiction.
— By Dena A. Kleeman
