Divorcing couples in Colorado and around the country are often unprepared for the financial consequences of ending a marriage according to a study published on Jan. 14 by Fidelity Investments. After surveying 1,107 divorced Americans between the ages of 25 and 75, the Boston-based financial services company discovered that it takes about five years on average to recover financially from a split. However, getting back on track can take much longer when spouses are not involved in day-to-day financial decision making. Four out of 10 of the spouses surveyed who told researchers they did not involve themselves in financial matters said that they had yet to recover from their divorces.
Legal and financial advisers say that the best way to avoid such pitfalls is to gather as much information as possible either before or during a divorce. They advise spouses to check tax returns and scrutinize bank statements and retirement accounts. The results of the study suggest that taking these steps will lead to the discovery of undisclosed income or hidden assets about 10% of the time.
Drafting post-marital agreements is another way to prepare for the financial ramifications of a divorce. This is particularly important when spouses have complex financial arrangements, significant assets, business interests or one or both of them receive a sizable inheritance.
Experienced family law attorneys may call on experts such as retirement planners, investment advisers and forensic accountants to help spouses prepare for property division discussions. Attorneys could also advise their clients to consider alternatives to traditional negotiations when reaching an amicable agreement seems unlikely. Cooperative approaches like collaborative divorce and mediation are sometimes able to produce results even in contentious cases, and they are more private than litigation.
Source: Fidelity Investments, “Divorce and Money”, Press release, Jan. 14, 2019