Phone: Perhaps you’ve heard “horror stories” of divorce from friends and relatives about court cases that went on for years with legal fees into the tens of thousands – and perhaps more.
You might mentally try to calculate how much you’re sure you’ll lose if you go ahead with a divorce.
Perhaps you’re overwhelmed by the thought of how much you’ll need to spend for a vague amount of “legal fees.”
But it doesn’t have to be that way. The reason you don’t typically hear about the spouses who resolve their issues out of court with minimal conflict, perhaps amicably, is because it’s most often the negative voices that speak the loudest.
Here are the top 3 causes of hefty legal fees during divorce and how to avoid them:
1. Difficult attorneys.
Often, when one spouse finds out that the other has an attorney, he or she will try to find a “pit bull” who might promise to “win” certain results by going right to court. Such a lawyer will more than likely litigate every issue, from filing motions with the court to wasting time and money on pointless threatening letters to your spouse’s attorney.
That’s why it’s important that you communicate directly with your spouse to get agreement to avoid such an approach. You might suggest that you both meet with a counselor who coaches couples during divorce. These couches will typically help each spouse work through their respective emotions so that feelings like anger and hurt are not carried out in court.
2. Minimal knowledge by one spouse of marital income and assets.
The more both spouses know about the income and assets of the marriage, the less the legal fees tend to be. There would likely be less legal work needed to obtain financial documents.
Ideally, both spouses should be able to easily access the bank and brokerage account statements to identify all of the checking, savings, brokerage and retirement accounts acquired during your marriage to be divided.
By the same token, each spouse should proactively assess their current finances and financial goals for the future.
This can be done by calculating your current household expenses and anticipating your likely expenses after divorce. Will you be renting or buying? Will you need a new car? Are you planning to retire soon? You should also plan to put aside “emergency” funds for unexpected expenses.
Determining the amount of post-divorce monthly expenses can help you determine the amount of cash flow you will need once the divorce becomes final. This will be extremely valuable when addressing such issues as alimony and division of assets and debts.
Your financial advisor can review your available assets and income and suggest options that make the most financial sense, such as a home equity loan or line of credit where you can deduct the interest on your taxes. Your accountant can advise how you might be able to deduct legal fees on your taxes as well.
3. Valuation of businesses.
Where one or both spouses own or operate a business, the separate fees for a forensic accounting professional can be significant, and can easily reach into the tens of thousands of dollars.
Such fees can be significantly minimized, however, by both attorneys agreeing to use an accounting professional who is trained and qualified as a mediator. The right professional will be able to walk both spouses through the valuation process and prepare cash flow analyses for both spouses. This can go a long way to ease the minds of both spouses in being assured that they will be able to meet their expenses going forward.
Please share this post with those who would find it useful. As always, we encourage you to call or email us for more information if you are considering divorce or post-divorce changes to your Marital Settlement Agreement.
