Managing Your Money : BREAKING UP : Surviving a Split : Is divorce in the cards? The important thing is to act beforehand.

Anna wanted to keep the house. It had the perfect arches, flourishing bougainvillea and, next door, the children’s best friends. Her departing spouse agreed, and Anna borrowed to buy him out.

A couple of years passed. The arches seemed less important than a crushing mortgage, and the “For Sale” sign went up. The market, however, was dead. When the house finally did move, it sold for much less than expected. Anna faced a capital gains tax that wiped out any profit.

Bad luck? No, experts say, lousy planning and typical of what happens in divorce settlements, when vulnerable spouses are asked to be as clearheaded as accountants.

“The house is never as important three years after the divorce as it is at the time of the divorce,” says Victoria Felton-Collins, financial planner and co-author of “Divorce & Money,” published by Berkeley-based Nolo Press.

If you’re headed for divorce or separation, you should know that the financial consequences could be dire. Perhaps the most important thing to do if a split-up is in the offing is to prepare.

Those who specialize in divorce--lawyers, financial advisers and mediators--agree on a few basics: Hostility costs money, information is power and retaining a legal barracuda devours as many assets as it protects.

The experts also agree on an underlying maxim of divorce: No matter how amiable and well-informed couples are, dissolving a marriage produces few financial winners. Two separate households cannot live as cheaply as one. In most cases, everyone’s standard of living drops for the short term, and single mothers suffer the brunt of the long-term financial repercussions.

Consider these statistics: The court orders spousal support in only 25% of all divorce cases; and in 46 of California’s 58 counties, less than half of the men ordered to pay child support send the checks, according to Drew Liebert, a family law expert who works for state Sen. Gary K. Hart (D-Santa Barbara).

In a study of 200 families, the Census Bureau reported recently that the average income of the household that ended up with the children fell by 37% within four months of a divorce.

Depressing, but not so sobering that marriages stay intact. About 160,000 couples divorce annually in California, with the average union lasting seven years.

Given the odds, a prenuptial agreement would seem sensible. But California law limits the reach of these contracts. They cannot, for example, lock-in child support or alimony. But they can define one spouse’s claims on a business or other separately held property.

Since prenuptial agreements are only marginally effective, the only way to avoid other financial sand traps is to act before a split.

Does that mean running to clear out the safe deposit box and drain the savings account? It depends on how much you trust your spouse.

At the very least, take inventory. Stephen Wagner, a Sacramento lawyer who chairs the State Bar Assn.’s family law section, says that closing accounts can unnecessarily raise the level of hostility. Sometimes, however, he advises a client to take half of an account’s balance. Others suggest closing all joint accounts.

The most important step either spouse can take once he or she has decided to divorce is to gather the marriage’s financial history--old tax returns, credit card bills, pension funds, insurance policies, stock holdings and any other financial data. Everything, financial experts say, is pertinent, including the cost of the cat’s annual visit to the veterinarian.

Each financial record contains hidden nuggets. Credit card bills could tip a wife to charges she can get deducted from the marriage’s shared debt--dinners, vacations and other expenses of an extramarital affair, for example.

With this information, an informed lay person can sit down, tally up the marriage’s assets and liabilities and generally predict the settlement, says Charles Ed Sherman, a co-author of “How to Do Your Own Divorce in California,” also by Nolo.

“Anything you acquired before the marriage is separate, anything after is divided half and half,” Sherman says, and so many divorces have been filed in California that almost any exception is covered by existing court decisions.

Take child support. The Legislature has reduced all the possibilities to a calculation table and, says Liebert, the rates have been boosted sharply since July 1. A court can also order child support if unmarried couples split.

Spousal support--the legal word for alimony--is discretionary. But even here, judges make their decision based on some basic facts, including the length of the marriage, income of both parties and the amount of money left over after child support and other expenses are calculated.

“Standard of living is always a big issue in alimony cases,” says Honey Kessler Amado, a Beverly Hills family lawyer. “Some women will look at how they have lived and want to remain at that level, but the reality is that if the dollars aren’t there, they won’t be able to.”

Kessler Amado says stay-at-home mothers or working women who earn less than their spouses can improve their long-term earning potential by presenting the court with a plan for going back to school.

Women can also improve their position by getting the courts to recognize a realistic level of need even if their spouse cannot afford to pay the full amount at the time of the divorce. If the husband’s earnings increase, Kessler Amado says, the woman can then go back to court and get her support increased to the previously agreed level.

The law theoretically makes divorce seem cut and dried, but passions inevitably muddy things. Emotional mistakes include giving up a car or a vacation house in the hope that being nice will lure a parting spouse back. Another is hiding assets that expensive depositions and subpoenas later uncover anyway.

Some of the biggest practical mistakes are made in calculating a 50-50 split without taking into account the tax consequences.

Anna’s disaster is a case in point. She could have avoided the vagaries of the real estate market and the capital gains tax by holding the house as a tenant-in-common with her former husband.

Similar tax slip-ups can occur when dividing shares in a company. The capital gains tax on stock holdings is based on the difference between the purchase price and the sales price. So, a share purchased for $2 and now worth $10 is going to have a bigger tax bite than a share purchased for $8 and now worth $10.

How does anyone figure all of this out? Here, depending on their profession, the experts disagree.

Sherman believes in getting advice, but not in hiring a lawyer. He says that 50% to 70% of the state’s divorces are filed by individuals.

Attorneys believe that they offer the best option, but they warn that clients should be prepared to collect their own financial histories. Some also advise using a financial counselor.

The average retainer in California runs from $2,500 to $4,000, and divorces can cost upward of $10,000 a person.

Financial advisers charge about $150 an hour. Financial planner Felton-Collins says she needs about 10 hours to handle a case.

Attorneys offer these suggestions in hiring one of their own: use one certified in family law; discuss fees first; do a thorough job of collecting information, and if your attorney seems angrier at your spouse than you are, run.

A Divorce Library

* “How to Do Your Own Divorce in California,” Charles Ed Sherman. (Nolo Press)

* “Practical Divorce Solutions,” Charles Ed Sherman. (Nolo Press)

* “Legal Guide for Lesbian and Gay Couples,” Hayden Curry and Denis Clifford. (Nolo Press)

* “Living Together Kit,” Toni Ihara and Ralph Warner. (Nolo Press)

* “Divorce & Money,” Violet Woodhouse and Victoria Felton-Collins with M. C. Blakeman. (Nolo Press)