Divorce isn't fair but it can be equitable
The following graph illustrates why it is essential to get professional advice from WDF BEFORE you sign your settlement agreement.
In Figure 1, the original property division seems to be scrupulously equal. The division, however, wasn't equitable. The women's assets will be completely depleted within seven years while her husband's investments will grow dramatically.
Tangible assets don't last. And yet divorce courts traditionally overlook intangible assets like salaries, benefits and potential earning power. With some adjustments in division of property and/or spousal support the results can be as shown in Figure 2.
Most divorcing couples really do try to arrive at a settlement that works for both partners. Unfortunately, what may look fair at the outset often doesn't remain equitable over time. Divorcing couples need financial expertise. Studies show that one year after the divorce, the standard of living of the woman and minor children has dropped by 27%. The man's by contrast, has risen 10%.
All too often, women do not get a complete picture of the fundamentals underlying the settlement they will be asked to sign.
In a typical marriage, the wife earns less than her husband. The family's lifestyle is quite naturally geared to the higher salary. Both partners invest in the more lucrative career. So, when they divorce, the woman's earning and retirement prospects are often lower than her spouse's. She also loses all of her investment in her husband's career. In a few years, she may use up her entire property settlement, just to make up for the shortfall in her new life. Meanwhile, her husband feels that he is giving away half his property and may also be paying spousal and child support. Statistics show he generally has the ability to recover quickly. His earning potential is his greatest asset.
Using proprietary software and graphic models, Women In Divorce Financial provides a clearer view of their long-term financial futures after divorce. Where disagreements occur, the graphic depictions of expected outcomes can be very powerful in helping parties reach settlements that fully address the financial needs and capabilities of each.
This article is made available to you from Women in Divorce Financial.
Eva Sachs is the founder of Women in Divorce Financial. She is a Certified Divorce Financial Analyst (CDFA™), has her CFP™ designation and is a member of the Institute for Divorce Financial Analysts.
She can be reached at esachs@womenindivorcefinancial.ca or by visiting www.womenindivorcefinancial.ca.