Have you ever heard the term “conscious uncoupling?” It was used to describe the reason for Gwyneth Paltrow and her former husband Chris Martin, lead singer from the band Coldplay, for getting a divorce back in 2014. What many of us don’t know is this term was coined by Katherine Woodward Thomas, the US psychotherapist who advised Gwyneth Paltrow during that time. When asked about the idea behind the term Woodward described it as a better way to describe a relationship ending with “goodwill and respect.”
No matter the term used to describe divorce, or the amount of goodwill and respect involved it remains an incredibly difficult, emotional and stressful situation for anyone. In the United States, one in two marriages ends in divorce. Divorce affects more than just the two-people involved and their possessions. It affects many other aspects of life: Family, friendships, children, business’, real estate, income, assets and retirement are a few things on that very lengthy list.
So how do you navigate the choppy, unchartered waters of divorce? How do you make sound, educated and unemotional decisions in an incredibly emotional environment? Here are four areas to understand and consider when going through a divorce.
Division of Assets – Any assets you owned during the marriage will be split “equitably” between the spouses. “Equitably” is a discretionary term to be decided by the court based on the specific variables of the two involved, however typically the courts look to make 50/50 splits of any marital assets. When it comes to “pre-tax investments, 401K’s and IRA’s, you will need a separate document called a qualified domestic relations order (QDRO, pronounced ‘quad-row’) which is created to properly split these assets avoiding a taxable event.
Division of Debts – Like “Division of Assets,” debts created during the marriage will be split “equitably” amongst the two individuals involved.
Children – If children are involved, there are several areas of consideration the courts will decide on, including Custody and Child Support. With regards to custody this is broken down into two categories, Physical and Legal. Physical is where the children live during what times. Legal refers to who is making decisions for the children and when. Child Support refers to the exchange of monies to cover the costs of the children. There is a software program that inputs data like custody time, income and other support obligations that will rate each person on a scale 1-10 which will then provide a “recommendation” for the amount of support to be paid.
Spousal Support (Alimony) – Like Child Support, Alimony is calculated in a software program that includes things like income, “ability to earn income,” education, age and duration of the marriage to name a few. This will produce a rating on a scale of 1-10 which will produce a “recommendation” for the amount of alimony, if any, to be paid.
It is crucial that you surround yourself with professionals that can educate and guide you through this process. When it comes to your assets it is important to be prepared and understand the options even before you ever step foot in the courts. With so much discretion the courts have in making these decisions for you and your family, being empowered with the knowledge of the process’ and the options you have is paramount to how it all ends up.
Most people who have experienced divorce rarely receive advice outside the scope of an attorney who is going to advise on only the things under the law and what the divorce decree stipulates. When it comes to the finances it is important to understand how these things will affect you prior to the decisions being made. The proper process of splitting those assets and its effect on your short term and long-term plans are rarely ever discussed during the legal process of divorce.
The terms we come up with to describe divorce does not change the fact that it is messy, and it will dramatically alter the trajectory of the lives of the people who are directly involved. If you decide to “consciously uncouple” make sure you are extremely conscious of your options, decisions and the people you have in your corner advising you. It will mean the difference between your expectations and reality.
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This article is written by Ronnie Thompson.