4 Costly (and Common) Errors To Avoid Making During Divorce Settlements
One of Hollywood's most sought-after divorce lawyers offers some wisdom.
The end of a marriage takes a toll on your emotional and physical well-being. Inevitably, it also affects your wallet. If you’re careful, a contested divorce can leave with nothing left to your name. Laura Wasser knows this better than most. One of Hollywood’s most sought-after divorce lawyers, she’s helped such clients as Brad Pitt, Ryan Reynolds, and Heidi Klum handle their high-net dissolutions. As not everyone has the bankroll to afford her expertise — and because she noticed how uninformed so many friends were about divorce — Wasser recently launched
Laura Wasser knows this better than most. One of Hollywood’s most sought-after divorce lawyers, she’s helped such clients as Brad Pitt, Ryan Reynolds, and Heidi Klum handle their high-net dissolutions. As not everyone has the bankroll to afford her expertise — and because she noticed how uninformed so many friends were about divorce — Wasser recently launched It’s Over Easy. an interactive website that uses video tutorials and expert-driven articles to help everyone understand the ins and outs of divorce settlements a bit better. Wasser shared with us some of the most common financial mistakes made during divorce proceedings.
Thinking You Can Beat the System
One most common errors Wasser sees is spouses thinking that they can somehow pay less than what they’ve already been paying to support their ex. “The fact is — and I tell my male clients this particularly — if they are the breadwinner, then they’re basically going to end up paying the same, if not a little bit less, than they were paying before,” says Wasser. “You’re still going to be supporting the lifestyle of your ex and your children — you’re just going to be doing it in one or two monthly checks as opposed to all the different things you pay with credit cards and checks each month.” If you don’t accept this outcome, she says, costly mistakes will most certainly arise.
Wasser often sees exs trying to squirrel away money to avoid having it factor into settlements. This is wrong for a number of reasons. The most obvious? They’re going to get caught. “Electronic banking and record keeping means you’d literally have to be doing it systematically in small increments for years,” says Wasser. “If you don’t, and a big chunk of money is all of a sudden withdrawn from an account? People are going to ask where the hell it went.” As you can imagine this doesn’t fare well in the eyes of the court.
Here’s a harsh example: Some years ago, there was a case in California where a man, post-separation, won the lottery. Normally, since this happened when the divorce was already pending, the winnings would’ve been his separate property money. However, he decided that he didn’t want his to know that he had gotten that money. He didn’t want it to be a part of the discussion so he didn’t say anything. But his ex discovered that he had hidden the assets and her team went to the judge. “Rather than just going ‘Okay, here’s a hand slap, we’re going to now split that money in the account,’ the judge took the entire lottery winnings and he gave them to the wife,” says Wasser. “So yeah, judges don’t like it when you hide assets.”
Not Sharing Paperwork
No one wants to hand their ex all their financial information; but, according to Wasser, it’s the best way to ensure you don’t get dinged for an overlooked account or payment during a divorce settlement. The best practice? “Give them absolutely every piece of information,” she says. “Then, have an informal sit-down meeting where you tell them how your business works, go through the paperwork, and document the meeting.” Not only will this engender trust but, per Wasser, it also makes it clear that you were completely upfront about everything. “Later, if you have to do more discovery down the lines, you can say ‘Yes, on January 22nd I sat down with you in this lawyers office at this time and went through all this information’, and save yourself from any issues.”
Underestimating Additional Fees
Here’s an example: Forensic accounting is the use of an accountant to analyze financial information in legal proceedings. No one really considers this process and, if you and your ex can’t handle this step without an intermediary, it can lead to fees of anywhere from $4,000 to $25,000. “This is such a large cost that couples don’t consider,” says Wasser.
The key to avoiding such unnecessary costs — and to divorce is general — is behaving like adults. “Anything that you can do to solve a problem by being really transparent, by getting the information out, and discussing it in a way that makes sense in terms of custody and in terms of money? That’s the best for both parties,” says Wasser. “Cutting costs by mediating, discussing, and negotiating is an extremely big part of the process — and a sign that you’re doing things right.” The more you can solve together, the more you can save.