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Covering your assets in a divorce

/ Source: Forbes

Bad marriages rarely make good divorces.

Torturing your soon-to-be ex in divorce court takes a little imagination mixed with viciousness and great gobs of money. If you want to make life miserable for the person, you can — often with the help of your attorney, who has a vested interest in litigating every little thing and running up the bill.

"Divorce is a simple division of assets," says Anthony Comparetto, an attorney in St. Petersburg, Fla., and author of Stop Dirty Divorce System. "But for many, divorce becomes a form of insanity. It quickly becomes more of an emotional than a legal issue — and the numbers are so simple."

For some, there is no depth left unplumbed in divorce.

"I once had a woman run into my office and shout, 'He cut the parakeet's feet off!' " Comparetto says. "The sad thing about divorce is that it shows good people at the lowest, nastiest point of their life. If you add a little pressure, some will explode."

If you want to be smart about divorce, do your homework and keep your emotions out of it. Splitting is rough enough without the anger.

Personal finance is promising territory for mischief in the hands of a nasty ex. You can fend off much of your ex's nastiness by taking some basic steps, including:

  • Gather and organize all financial records and make copies of everything, one for yourself and a second for your attorney.
  • Close, or at least freeze, access to all joint accounts.
  • Keep a written record of all expenses run up before and during separation, including bills jointly paid and improvements made to the house.
  • Document your net worth and keep a record of cash flow during separation.
  • If you suspect your soon-to-be ex is hiding assets, you may have to hire a forensic accountant to sniff out the stash. Warning: This can be expensive, and if your ex is unusually devious, there's no guarantee of success.
  • Before you sit down to a settlement conference, make a list of all items you want covered in the agreement. Consider the tax ramifications of forced sales of stock or other investments, and consult with your financial planner as needed.
  • If there's something you know your former spouse will want in the property settlement, don't give it away in a futile gesture of goodwill — use it as a bargaining chip and trade it for something you want. The business side of divorce is hardball — and don't forget it.
  • Plan to settle out of court. The attorney fees will be significantly less, and the majority of cases don't go to court. Check the settlement against your wish list before signing off.

Closing joint credit accounts and opening an account in your name only isn't difficult and should be done as soon as possible after you decide to split. The Web sites of major banks offer excellent information on the wise use of credit, including Wells Fargo, JPMorgan Chase, Bank of America  and Citigroup.

State differences
Remember that divorce is governed by state law, and some details may differ from state to state. There can be great variation in interpretation or application of the law among judges in the same courthouse, so ask around about temperament, attitudes toward men and women, joint custody, alimony or moving to another state with the children.

Most attorneys will be reluctant to disqualify a judge, because they'll be back tomorrow with other cases. But if you have good reason to believe a judge can't be fair in your case — and you've got to nail it down because mere feelings won't cut it — insist that your attorney file the needed papers to get your case transferred to another court.

If your attorney promises an outcome, it's time to get new representation. No one can be certain how a judge will rule, and a competent attorney will tell you only what's been done in other cases and discuss likely outcomes.

Remember that your attorney is an advocate — not your friend or confidant. Most attorneys don't want to hear the gory details.

Getting nasty is expensive, and it's nastiness — not division of property — that leads to attorney's fees hitting $100,000 or more in what should be a simple case. Estimates on the average cost of a divorce in the U.S. range from $15,000 to $30,000.

"To avoid high attorney's bills, learn how to listen to your former spouse and learn how to woo that person," Comparetto says. "Think back to when you first dated — you listened to what each other said. The marriage failed, in part, because the couple stopped listening to each other. Listening is harder in divorce, especially if one or both parties is angry. Find a way to listen, because it will lessen the pain and keep the final bill down."

Think what you want in the divorce. For most, the answer is simple: out of a dead relationship.

Most men want regular contact with their children, but few want to be the custodial parent. If the kids are going to live with their mother, she needs money to raise them and may need money to cover her expenses until she returns to work. Two people who once loved each other and love the children shouldn't have any trouble figuring this out.

Of course, divorce is rarely that simple. Comparetto says divorce consumes about 60% of the time in civil court and has become a multibillion-dollar industry complete with shrinks, mediators, accountants and, for those who insist on being nasty to the nth degree, private detectives. The matrimonial law work alone is a staggering $28 billion-per-year industry.

"I no longer handle divorce," Comparetto says. "I saw the whole system turn good people bad."