How Women Can Craft Divorce Settlement Plan

It seems fitting that now, in the height of wedding season, there’s a new study that examines what happens to women and their children after divorce. The findings aren’t pretty.

The Census Bureau study, which tracked the effects of divorce and separation on 200 children, revealed that a high percentage of women and children become impoverished after a split.

Average income of the single-parent family created by divorce fell by 37% within four months of the breakup, and welfare dependency doubled in the families studied, the Census Bureau report says.

The findings were similar to results of previous studies, which have also maintained that men are usually better off financially after a divorce, while the majority of women are worse off.

“The No. 1 impoverisher of women and children is divorce,” says Kristi Stone, a spokeswoman for the Family Research Council, a pro-family lobbying group in Washington.

Some of the problem can be traced to fathers who fail to pay child support. The Census Bureau says one-quarter do not make court-mandated support payments and another quarter make only partial payments.

However, sometimes women are at least partially to blame for their financial woes, says Renee Martin, co-author of “The Survival Guide for Women.”

Women facing a divorce often fail to compile the information needed to get them an adequate financial settlement. Some will even go against their own attorneys’ advice by asking for smaller amounts than warranted in an effort to keep the split on “friendly” terms, Martin says.

Many are unrealistic about their financial needs and others are so emotionally shattered by the split that they fail to investigate their rights until it is too late.

The good news is that women can fix at least this portion of the problem. They simply need to stop sobbing over family photo albums and start delving into the checking account.

The first thing a woman facing divorce needs to do is get informed, says Ann B. Diamond, a New York-based certified financial counselor who conducts Citibank’s “Money Matters for Women” seminars. If a woman has not been handling the family finances, she needs to familiarize herself with every aspect of their financial life--from assets and liabilities to income and debts.

One way to start is to get copies of tax returns the family has filed the past two or three years and pull together check registers that show at least one year’s worth of bill paying. She also needs to compile information about family investments in the stock market, mutual funds, real estate, bonds, limited partnerships, etc.

If those investments were made through a broker or a mutual fund company, the information is usually available on monthly account statements.

The tax returns can give clues about assets that may have been overlooked. For example, interest and investment income, capital gains and a host of other investment information must be reported to the Internal Revenue Service.

Contributions to individual retirement accounts are also reported, although contributions to 401(k) plans, which are employer-sponsored retirement programs, usually are not.

After the assets are tallied, pore over check registers and categorize expenditures into groups such as housing/utility expenses, food, entertainment, education, transportation, clothing/cosmetics, insurance and taxes.

Then estimate what expenditures in these categories will be once the split is complete. The point is to formulate a workable budget that should help determine how much continuing financial support might be needed.

It is important not to forget about items that don’t necessarily show up in the checking account, such as health insurance that may now be provided through the husband’s employer. If a woman has children, she should also review her own life and disability coverage, Martin notes.

After all this work has been done, individuals are in a good position to start working with an attorney to formulate a financial settlement with an ex-spouse.

It is important to look at settlement discussions as a business deal rather than an emotional debate, Diamond adds. Accepting insufficient support won’t necessarily keep the divorce “friendly,” she says.

Indeed, if your goal is to maintain good relations, it may be more effective to graciously give him your half of the ratchet set and vow never to call his new wife a “bimbo.”