Stay at home orders have forced some couples to face major issues in relationships that were already troubled. If you find yourself in a situation wherein you believe divorce post-coronavirus is likely or even inevitable, this article will help you weigh the pros and cons of filing for divorce now or waiting until after the lockdowns end. While the timing of filing for divorce is a completely personal decision, it is always wise to understand the process and the advantage of speaking with compassionate and caring counsel to prepare yourself for a divorce.
Understand the Process
First, couples contemplating divorce do not have to wait until the stay at home orders are lifted or life returns to “normal” before filing for divorce. Many states have cooling off periods so that, even in the most amicable situations, there is a period between filing the divorce and the earliest date the divorce can be finalized. For example, in Texas, even if you and your spouse agree on all the details, a court cannot grant your divorce until at least 61 days after the date of filing. Therefore, if you believe your divorce will be amicable and agreements will be reached, it may benefit you to file sooner rather than later just to start the clock for the cooling off period.
The divorce process does not have to be lengthy, financially draining or high conflict. However, some parts of the process are beyond your control. Even if you want an amicable divorce, you cannot control how your spouse acts or who your spouse hires to navigate through the process. You can, however, prepare yourself for the process and counsel who can walk you through each step. Regardless of whether the case proceeds amicably or becomes more high conflict, having a competent family lawyer on your side to help protect you will ease the process and provide a roadmap for steps to take.
If you and your spouse agree on the terms of the divorce, most courts are accepting agreed orders so your divorce can be finalized even if courts remain closed to most hearings. Most mediators are conducting virtual mediations via Zoom and other similar platforms. Whether or not you ultimately settle, mediation will be required by most courts before a trial is held, so you may be able to proceed with mediation now in hopes of obtaining a quicker trial date once the courts reopen. The substantial majority of cases – even the high-conflict cases – settle in mediation.
Gather Financial Records
Even if a couple agrees on how to divide the property, most lawyers will ask to review certain financial documents to properly advise you about the division of property in your particular circumstances. The most commonly requested documents in a divorce are: three years of tax returns and at least one year of bank records, credit card statements and documents supporting any other assets or liabilities such as mortgage statements, car loans, retirement accounts and investment account statements. In families where one spouse controls the finances, staying at home is a great time to review the assets and bank records to get up to speed, to the extent possible, on where the assets are located.
Do Not Invade Your Spouse’s Privacy
Gathering financial records is wise, but it is critically important that you do not attempt to gain access to your spouse’s private information on their email, smartphone or other platforms, in order to catch them in an act of misconduct. These actions could be considered an invasion of privacy for which your spouse could sue or for which a criminal charge could be brought against you. Married individuals have a right to privacy in Texas. Even if you know your spouse’s passwords, it’s wise to exercise extreme caution and consult a lawyer before you access financial records or other information such as texts or social media chats on a device that is not yours. If you are in Texas and your spouse is also in Texas, it is legal to record a conversation between you and yours spouse because Texas is a one-party consent state (you are the spouse consenting to the recording).
Prepare Yourself – Financially, Emotionally and Physically
As Warren Buffet once said, “you’ll be a wreck if you don’t take care of your mind and body.” Divorce is an emotional process, even if you are the one who wants the divorce. If you are at your best emotionally and mentally, you will be in a better position to negotiate the terms of your divorce settlement. Clients often make emotional decisions about finances just to finalize the divorce that can negatively impact their post-divorce life. So take care of yourself before and during the process. Even in the most amicable cases, divorces come with high emotions. While you can confide in your counsel, a lawyer is not a mental health professional and a therapist’s hourly rate is usually cheaper anyway. Do not hesitate to seek out mental health advice.
Set Up Your Own Financial Accounts
If you do not already have at least one bank account and one credit card in your name, now is the time to set up those accounts. You can apply online for bank accounts and a credit card. Many spouses operate with joint bank accounts and credit cards. Setting up personal accounts now allows each spouse to have access to funds during the divorce and a place to transfer funds during the division of property. Obtaining a personal account now also helps in having funds set aside for short-term needs if one spouse decides to drain bank accounts, cut off credit cards or other similar inappropriate behavior.
Opening a credit card and a bank account in your sole name is imperative particularly for spouses who have spent the entire marriage using the other spouse’s credit. If, for example, the husband is the sole income earner and the wife is a stay at home mom, it is often the case that the wife may not have any financial accounts or assets in her sole name; this ultimately may affect her credit and her ability to borrow funds for a future mortgage or for other potentially necessary loans following the divorce.
Look at Housing Options
If neither spouse can pay for the marital residence with a single income (or even the possibility of no income at the moment), take time to consider your housing options, such as apartments and rental homes. Knowing the costs of various options can help you define a budget. Regardless of the size of your estate, knowing your estimated post-divorce budget will help you and your attorney strategize and determine the best division of property. In addition, knowing the location of houses/apartments you can afford post-divorce may help you make decisions about custody and possession schedules if children are involved.
Texas Laws on Community Property and Separate Property
In Texas, dividing investment accounts begins with a determination of whether the accounts are separate or community property. Community property is defined as property gained during the marriage by either spouse, other than separate property. Separate property is property owned or claimed by a spouse before the marriage, as well as certain types of gifts, inheritance and money gained from personal injury (with the exception of loss of earning capacity) received at any time before or during the marriage.
When determining whether property falls into the category of “community” or “separate,” the name of the spouse on the account is not as important as the character of the money in an account. Earnings such as capital increase from investments and gains from shares of stock will both typically be community property regardless of whether community funds or separate funds were used to purchase the investment.
If separate property produces income, the income produced is typically classified as community property; however, an increase in value of an item of separate property will remain separate property. For example, if the wife’s separate property produces rental income, then that income is community property. In the same hypothetical, if the wife’s separate property naturally appreciates in value from $300,000 to $350,000, that entire $350,000 is still her separate property.
Dividing Investment Accounts and Closely Held Businesses
If you and your spouse own a closely held business or even work together in the business, divorcing may be a more stressful at this time because no one knows the real impact conoravirus will have on businesses and the economy. Dividing a closely held business during a divorce is tricky and requires strategic planning on both spouses part. The business will have to be valued and divided. While it is possible to continue to co-own a business post-divorce, it is generally the case that one spouse will be awarded the business in the divorce and the other spouse will receive a portion of the value of the business in the division of property.
You and your attorney will choose an expert with experience in valuing your specific type of business to help value the business but also to help develop goals and strategies for handling business affairs during the divorce. Even if you are not ready to file for divorce, you can hire an expert to look through your business related financial records so you have a preliminary idea of the value of the business(es) and how the business may (or may not) be impacted by filing for divorce.
Your investment portfolio may have taken a hit over the last few months, but during the divorce process you will need records for all of your investments, including but not limited to retirements accounts (IRAs/401(K)/Pension), brokerage accounts (stocks, mutual funds) and even private equity investments to prepare for a final division of assets. A careful analysis of all your joint investments will help you prepare for the most strategic post-divorce financial plan for your unique circumstances, even if the value of your investments happens to be lower now than it was a few short weeks ago. A qualified domestic relations order (also known as a QDRO) may be required to divide the assets titled in your spouse’s name and you will need backup documentation for your investments in order for your attorney to prepare a QDRO or other document to divide the assets.
The more information you have collected regrading investment accounts the better you can prepare for the divorce. Your attorney and/or financial planner can review the history of your investment accounts, make sure all of the assets are accounted for (what if your spouse sold stock recently for cash without your knowledge and decide which investments are worth fighting for in the divorce as they may be more (or less) valuable in the near future as the stock market recovers from the economic downturn triggered by the pandemic.
Do Not Divorce Alone
Last but not least, do not divorce alone. You will need personal and professional support to get through the process. Be careful how much you confide in your close personal friends as they may become witnesses in your divorce trial. However, you need a personal and professional team of support, including a confident compassionate lawyer skilled in family law to help you through the process and ensure that your post-divorce life is as you envisioned.
One advantage of seeking counsel from a seasoned family law attorney is that their experience will guide you to recognize what decisions are too emotional and what decisions are financially savvy. For example, while it may be tempting to fight to keep the family home, thought must to go into the decision about paying for the costs of property taxes and future repairs and your post-divorce needs. Family law matters require a unique skill set and an understanding the client’s goals and objectives while navigating both emotional and legal decisions that can affect a client’s life for years to come. A good family law attorney is available to provide legal support as well as emotional support throughout the entire process.
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