Financial Emotional Intellegence - Divorce

Financial Emotional Intellegence - Divorce

THE BIG 5 'D's

·        Death

·     Divorce

·        Disease

·        Disability

·        Debt

 

Always have a financial plan compared to having a life plan. A financial plan is measurable and executable whereas a life plan could potentially just be a dream of a house and 3 children.

When starting a business or buying assets you might think that you are reducing your risk (debt default or the business fails) if an asset is registered on one spouses name or even worse you marry out of community of property. But what if the business is a huge success and the marriage fails?

 

 

 

 

Today:
 

·       Divorce is almost a national sport these days.

 

·       You have a 50% risk rate.

.       Supporting the children is your problem.

·       Supporting yourself an even bigger problem.

·       Getting a divorce is extremely easy, 
        living it every day very difficult.

·       There are marriage regimes that 

        protects you financially.

·       From date of marriage invest in

        your skills or education.


 
19th Century:
 

·     Very few women could afford to
      get divorced.

 

·     How would they have survived with

      no bank account? 

 

·      The concubine rate was high and morally

       acceptable.


 

 

From the day that you get married you are at risk of getting divorced. Talking about religion, politics and money as we have been taught is a taboo, but divorce...when you think of the possibility that it might happen to you, you should put a plan in place just the same way as you plan should your business fail.  Divorce is an extremely expensive exercise.

 

Financial Emotional IQ Check:

 

  • Don't think it will never happen to you? The stats won't lie, have a plan in place.

  • Planning is similar to death except you sometimes retain 50% of your wealth.

  • Building on the 50% retained wealth takes more than a 100% effort.

  • Having a plan in place is not a sign of divorce. If you are wrong in your planning you have effectively empowered yourself and added to the wealth of your combined estate. Have I mentioned that you reduce your risk when you have 2 balance sheets when married ANC or ANC with accrual.

So if you have built a marriage and family together however long or short period and divorce happens would you be able to become the CEO of your estate?

        
You need start up capital to start a business -  for a post divorce life you would need the same. Ensure you have an investment in place that will cover legal costs or perhaps pay towards relocation or other expenses. An Investment Plan from date of marriage could save your financial life or add to you retirement plan if all works out in the end. But if you have no cash in hand very few banks, if any will fund your divorce.

        
Divorce with as little debt as possible, getting out of debt will take longer because your income is now halved and your debts have remained the same.
It is easier to get out of debt than to lower your standard of living.

       
If you divorce at the age of 40 and you had to give 50% of your wealth away, it will take 200% to rebuild your wealth to what it was before (time and lots of it is a big problem suddenly). This puts your retirement planning at risk. Best you get financial advice before and after divorce.

   
The majority of child care reasonability is bestowed to the mother of the children. Even if you have shared responsibility, weekends and holidays are rotated, the cost is two fold for the mother to care for her children. A simple example would be the transport cost to take children to school and back and attend extra mural activities, if she does all the driving then the fuel bill is far more for this parent. Make sure you do the required planning.

   
You will be able to sue for rehabilitative maintenance BUT this is sometimes temporarily depending on your age and qualifications. This then does not make sense for one partner to invest in paying for groceries, furniture, clothing, utilities etc. Although these are necessities be aware that these items have no value once used. Make sure your name is also on valuable pieces of paper like title deeds, share certificates, trust deeds, unit trust investments etc.

       
Invest in your education and always update your skills. Try to hold on to your career even if it is  a half day job. The one thing that nobody can ever take away from you is your education and work experience -  This is a Smart Investment! Nobody can give you an education or skills after a divorce, if you did not attain them before your marriage, you will start at the bottom!

  

Remeber the following when negotiating your divorce:      


See a specialist financial planner at the start of the process. This will help you analyse how the various divorce settlement options you'll be presented with will impact your future financial security.  


Understand your marriage contract, and if you don't, find someone who can help you. Are you married in or out of community of property? If you are married in community or out of community with the Accrual system, you are entitled to half of the marriage's estate.

  
Remember that you can sue for rehabilitation maintenance. This is to cover the costs involved in setting up house again - relocating cost, utility bills, or even studying again to up date your skills or qualifications.

     
Draft a detailed budget of your current monthly expenses. For you and your children. Be sure to include future expenses like cricket bats or swimming lessons for the kids. Secure the monthly maintenance with an insurance policy on your ex-spouses life in case he/she becomes disabled or dies. This policy can be ceded back to your ex-spouse once the children are financially secure.

      
Try to stay in your house (if it's safe and close to your children's school or work). This will give you and your children stability. Also remember that you shouldn't have to pay transfer duties for a property transferred to you after a divorce. There may, however, be a bond registration and attorney fee. You can always sell the property later or rent it out.

        
Ensure that your settlement agreement is drafted with the correct wording  when you claim from each others retirement funds. The policy numbers, names of the funds and the percentage MUST be in the order to have a valid claim. Some funds will not pay the claim if the word pension interest is not
mentioned in the court order. 

        
Include a clause in your contract that states that a subsequent claim on any assets that weren't disclosed can be made.(If you are married in community or out of community with the Accrual system)

       
Don't settle for less to get it over with. Divorce is a legal process that takes time and strategic planning. Don't accept less than 50% of the joint estate, as is
prescribed by your marriage contract because you allow your emotions to override the process.

        
Remember that your assets also include companies, retirement funds, shares and share options,loan accounts and 
holiday clubs etc.

 

What the widows got right:

·        They never got divorced.

·         If they could have divorced, I am sure they would have labelled it too!!