Timing is Everything
Divorce does not happen overnight. Just as you don’t jump into marriage to make it right, getting out of it should also be a well-thought-out move.
Because it is a long and detailed process that may take months or even longer, it’s important to take steps to lessen its emotional and financial impact on both partners and the family.
When it comes to divorce and when to do it, timing is everything.
When is the Best Time to Divorce from an Emotional Standpoint?
January has recently become known as “Divorce Month”. Often because people are reluctant to rock the boat during the holidays, so they put off filing for divorce until January. Some attribute the spike in figures to holiday stress which can put even more pressure on an already faltering marriage.
A recent study based on data gathered between 2001 to 2015 seems to affirm this. The period between January to March shows a spike of 33% in the number of divorce filings.
From an emotional standpoint, filing early in the year does make sense and it may be the best time to divorce. Barring any major problems that can derail the process, it’s possible that a divorce may get wrapped up during the summer. While there will never be a good time to divorce, finalizing a divorce before the start of a new school year gives you and your children time to adjust to the new normal.
A divorce during the school year can be disruptive, especially if it involves making a move to a new home and possibly new schools. This can be stressful for both ex-spouses and extra traumatic for the kids.
Imagine your kids leaving friends they have in their old school and transferring to one where they may not know anybody. Add to it the stress of the divorce, and this can be emotionally scarring.
When is the Best Time to Divorce from a Financial Standpoint?
If divorce is inevitable despite your best efforts, there are certain steps you can take to be in the best financial situation possible. Here are situations that can give you better possible financial outcomes.
When There’s Minimal Credit Card Debt
As a Certified Divorce Financial Analyst®, I would advise you to assemble your financial documents so you have a complete picture of your household finances. Doing so will not only give you an idea of how much assets you jointly own with your spouse, it will also outline all debts.
In California, this is important because it is a community property state where property and debt acquired during the marriage are considered owned by each spouse equally. If your spouse has accumulated credit card debt during the marriage, you are both legally responsible for this debt. If one of you defaults, the other spouse will have the financial burden.
If you are contemplating divorce, timing it when your credit card debt is at manageable levels is a wise financial move. Sharing a smaller debt burden can put you in a better financial position. This would be the best time to divorce.
When Your Credit Score Is Good
A divorce can land a serious blow to your credit score. This can happen as bills are missed while the settlement is not yet finalized.
When your credit score is good, this makes it easier to find a new home to rent or to own. This also makes it easier to purchase another car if your ex gets the car during the settlement. If possible, consider waiting before filing for divorce to give yourself time to boost your credit score.
If you are planning to file a divorce, you will be in a better financial position if you plan ahead. Establish your own credit and open up your own bank accounts. Such moves lay the foundation for a more secure financial future and create a better time for divorce.
My suggestion as a Certified Divorce Financial Analyst?
Obtain a credit card and open checking and savings accounts under your own name.
Obtain a copy of your credit report. Correct any errors it may contain.
Seek professional advice on how you can boost your credit score.
When the Real Estate Market Favors Sellers
While some people will want to hold on to the family home for sentimental reasons during the divorce, it is often more logical to sell the house and split the proceeds to afford smaller and separate homes for each partner.
For a scenario like this, the best time to divorce is if it’s a seller’s market. This means you and your spouse can maximize the proceeds you get from the sale of your home. This can give you enough to pay off the mortgage and divide any equity left over with your spouse.
On the other hand, if the real estate market is in a slump, you may agree to have one of you get the house as part of the settlement. However, the spouse who will continue living in the property may prefer to divorce during a weak real estate market. The settlement will still be 50/50, but if the value of the house is down, the equity will also be down, and that is less you will have to give up in other areas, such as retirement or cash.
When You’re Expecting Extra Income or Assets
In a case like this, it is better for the spouse who is anticipating a bonus or raise to have the divorce finalized before coming into receipt of these extra monies. Under California community property laws, any income or assets that you receive after the divorce is finalized will likely remain under your name.
When the Children are Older and in High School
When there are minor children involved, divorce becomes more complicated as there are more arguments that relate to child custody and child support. The parent who pays child support may be required to do so for many more years.
When a divorce occurs and the children are older, child support may only have to be paid for a couple of years. Obligation stops as soon as the kids reach the legal age of eighteen or high school graduation.
As the children move on to college, college costs are not a requirement of child support. Parents should help their children, but that frequently does not occur. But there may be opportunities for your children to get more financial aid being part of a divorced family. Smaller assets and lower income may help your children qualify for student loans or grants that may not have otherwise been open to them if they were still part of an intact family. These programs only consider the income information of the custodial parents to determine eligibility for financial aid.
The Best Time To Divorce: I Can Help
If you are contemplating a divorce or are in the middle of one, I am here to help! I can give you valuable guidance on financial decisions you make during the divorce process, so you emerge financially stronger and better empowered to tackle the next chapter of your life.
Take Control of Your Future
Whether relocating after a divorce is by choice or not, our team will help you plan for your move while keeping your financial well-being in mind. Kimberly Surber and Leslie Valant, both Certified Divorce Financial Analysts® can guide you in your financial decisions that will help transition you to your new life in your new location successfully.
Both Kimberly and Leslie provide step-by-step guidance on matters related to divorce. With a wide range of experience and expertise related to divorce issues, our team will simplify the process and provide much-needed clarity in areas such as long-term tax consequences, asset, and debt analysis, dividing pension plans, continued health care coverage, stock option elections, protecting support with life insurance, and much more.
This information is not intended to be a substitute for seeking legal advice from an attorney. For legal or tax advice please seek the services of a qualified attorney and/or qualified tax professional.