There is an old joke that family law attorneys tell about divorce that goes like this:  “ Why is divorce so expensive?  The answer is – because it is worth it.”   Although this is dark humor about a very serious subject, I don’t think that divorce needs to be as expensive as it sometimes is, especially if couples do not allow their emotions to get out of control, and are able to work together, rather than to go to court.

With the economic situation as it is, many couples are forced to spend as little money as possible on divorce, often opting to forego legal and financial advice.  While limiting the cost of the divorce is important to most people, doing things correctly is also critical, and most couples are unfamiliar with the legal and financial nuances of divorce.  Most divorced people heal from their divorces and are able to go on with their lives within about a year.  At that point, they then may realize that they have a really crummy settlement agreement, at which point it is too late to make any changes.

Divorcing couples generally have one chance to get things right during a divorce.  According to Fadi Baradihi, CEO of the Institute for Divorce Financial Analysis, speaking at the IDFA National Conference in Chicago, on July 2009, “Do-it-yourself divorce is very likely to create time-bombs for couples who do not understand the legal and financial implications of the agreement they have created and signed using a kit or online service.  This is where a financial professional trained in the special issues of divorce can really help.”

For example, settlement agreements may need to contain a number of clauses to protect each party as the economic situation changes.  What if the house can’t sell?  What if one party wants to get their portion of the equity from the house and the new appraisal indicates that there is less equity than estimated, or worse - a negative equity?  What do they do with the stock options that are underwater?   What if the spouse getting the marital home cannot qualify for the mortgage payments?  How long must they receive maintenance or child support payments to qualify for the mortgage?  Which assets should they select to receive as their portion?  If one spouse is considering bankruptcy, would cash or the IRA be a better asset?  What happens to child and spousal support if the payer spouse dies before the payments end?

I have actually had to adjust agreements as the stock market was falling to include clauses that indicated how “investment experience” on various accounts was to be treated.  In another instance, I was discussing with an unemployed client the possibility of refinancing her house, and the mortgage refinancing rules were changing as the divorce was occurring.  By the end of the divorce, the rules had changed so that she was unable to refinance – she received a lot of assets as a result of the settlement, but had no income.

The Honorable Judge Kathleen McCarthy, in Wayne County, Michigan, sees a lot of pro-se, or do-it-yourself divorces.  She says that so many of them are poorly done and fraught with legal and financial problems.  Her words of wisdom are, “Most people would benefit from spending a least a couple of hours consulting an attorney and/or a divorce financial professional to avoid future problems.”

I understand that most couples going through divorce just want the pain to end and the hassles of divorce to be over.  I have had couples tell me “I don’t care what happens – let’s just get it done and the sooner the better.”  I have had to remind them that this is an agreement that they will be living with for years – so having a little extra time to think things through and to make sure it is right for them is so important.