Divorce can make even the most successful and intelligent people act irrationally. Too many individuals allow emotions to dictate their decision-making process when it comes to issues of marriage and fail to consider all the ramifications of divorce.
That was the point Cordell & Cordell Principal Partner Joseph Cordell made in a recent appearance on Money Radio’s “Business for Breakfast.”
“It’s interesting that without question the single most monetarily important decision of their lives, which is whether or not they’re going to marry and whether or not they’re going to stay married will have a greater impact on their life than other, and yet it’s something very few people think about from a financial standpoint,” Mr. Cordell said. “They allow themselves to be driven by emotions, by anger, by perhaps other factors that are not rational, and it’s just interesting that these same people would never consider making far less important decisions in that way.”
The sad fact is that divorce can lead to financial ruin for many individuals when they decide to act on a whim.
The lack of planning often manifests before the marriage even begins as many couples shun the idea of signing a prenuptial agreement due to societal attitudes that they are a precursor for divorce. In reality, sorting out how assets are to be divided in the case of divorce is a mature and reasonable decision that can help avoid financial strife in the event that a marriage does fail.
Once a couple marries, everything acquired during the course of a marriage is considered marital property and subject to division. Mr. Cordell tells his clients, as a general rule, to assume a 50/50 split of marital assets during divorce.
Furthermore, anything that was comingled or retitled during your marriage will likely become a marital asset, and any income accumulated during the marriage will likely be considered marital money.
But as you can see, once you start down the road to divorce, the financial ramifications are enormous. Not to mention there will be an impact on your credit, potential child support payments to make, possible custody issues to sort out, and a range of intangibles that come with the uncertainty of divorce.
The longer a couple has been married, the more these issues are magnified. In a column for Financial Advisor Magazine, Mr. Cordell notes that, in his experience, divorces following a longer marriage are typically spurred by meeting someone else rather than a crisis that leaves divorce as the only option.
“I believe a large portion of divorced couples that were married for 10 or more years could have celebrated their 50th anniversaries had they hung in there and would have judged their marriages reasonably satisfactory at the least,” Mr. Cordell said.
Taking an objective look at a potential marriage or divorce can be extremely difficult. No one enters a marriage expecting it to fail, and when you encounter the inevitable challenges that come with marriage, divorce can seem like the only answer.
But before making that decision, it is crucial to take emotion out of the equation and analyze the financial impact your choice will have on your future. Failing to do so can have disastrous consequences.