Money issues are among the top three causes for divorce, with 22% citing it as the main reason. But finances could also be keeping couples together.
For one, the process is expensive—the average divorce costs $15,000 per person. For complicated splits involving custody disputes, expenses can easily tick up to $100,000. On top of the hefty price tag, the financial strain of maintaining two separate households may push some couples to stay together, despite their differences.
If a potential marital split is on your mind, you need to start preparing your finances early, long before any divorce decree is issued. Gaining knowledge and taking proactive steps now will benefit you (and your future retirement plans) later on.
You’ll find plenty of advice online for how to prepare financially for a divorce: basic tips like track your expenses, gather your documents, and avoid big purchases. While these steps are essential, the dynamics shift when you’re the main breadwinner. You may face substantial household expenses, shared investments, and significant assets that require careful planning as you navigate this transition. This becomes even more critical if you have children involved.
Research shows that in 29% of opposite-sex marriages, both spouses earn about the same amount of money, and 16% have a sole or primary breadwinner wife (Pew Research Center, 2023). If you’re part of the latter group, you will likely be the Payor in the settlement. This role makes getting your finances in order extremely important.
Here’s what you need to take into account as a breadwinner wife.
Experience from a trusted friend or confidant can be a lifeline—but the specifics may not apply if they’re in a different state. Variations in state laws can impact everything from required documentation and court procedures to how assets are divided.
Consider the following California-specific divorce laws, for example:
If you’re unsure whether you should move money, change accounts, or make any other financial moves pre-divorce, talk to an attorney licensed in your state.
Hire a certified real estate appraiser to determine the fair market value of your home, so you have an objective basis for negotiations or court decisions.
If you live in a community property state like California, any property acquired during the marriage is typically considered shared. This means if you acquired the home prior to marriage or inherited the house, you need to keep the asset separate and never “commingle” in order to claim it as individual property.
The timing of the appraisal is also important, since real estate markets can fluctuate. Consider obtaining multiple appraisals if the divorce process becomes lengthy. Additionally, assess the remaining mortgage balance and any home equity lines of credit to calculate your net equity in the home (value minus outstanding mortgage and any lines of credit/loan balances), which is often a significant marital asset.
Protect your business finances and your personal wealth—hire a professional to get a valuation early in the divorce process. A clear, objective assessment of your company’s worth will help you get a fair asset division and avoid disputes over its value.
A forensic accountant or appraiser will review your financial records, assets, liabilities, and market position, using methods like income-based, asset-based, or market-based approaches to determine the value.
If you hold a partnership interest in a law firm, review your partnership agreement closely for any clauses related to divorce. Some agreements include specific provisions for valuing and dividing partnership interests.
Valuing a law firm can be complicated due to intangible assets like client relationships and goodwill, so consider hiring a valuator with experience in law firm valuations. Also, check for any buy-out provisions in your agreement that may activate in the event of a divorce.
Understanding your overall compensation is crucial as a breadwinner. If these assets are significant, your spouse could receive a larger share during asset division, which can affect your financial security, long after your return to single life.
Your overall compensation includes not just your salary but also benefits like stock options, pensions, and other retirement plans. By knowing the full value of your earnings, you’ll be better equipped to advocate for a fair outcome and avoid any surprises.
As the higher earner in a divorce, you may be looking at future costs for alimony and/or child support. Courts look at each partner’s financial needs, current income, assets, future earning potential, and sacrifices made during the marriage to decide these payments.
If your partner took a lower-paying job to raise children or manage the home, you might have to provide financial support. Alimony isn’t guaranteed and can vary based on how long you were married, while child support usually follows state guidelines.
If your spouse hasn’t worked, you may have to pay for their retraining or education to help them get back to work. This temporary support, known as “rehabilitative alimony,” aims to help them become self-sufficient.
The duration of your marriage plays a crucial role in determining your divorce settlement. Courts classify marriages into three categories:
Keep in mind, the length of marriage isn’t the only factor at play. The presence of children, each partner’s earning capacity, and standard of living can influence decisions, as courts evaluate the couple’s overall circumstances. A 50/50 split is not guaranteed, even in long marriages.
Keep your focus on the outcomes you desire, even when tensions run high and exhaustion sets in (we know, it’s easier said than done). While it may feel like there’s a rush to “get it over with” , the right professional support will keep you from making costly mistakes during your divorce.
An experienced divorce attorney (preferably one specializing in high-asset cases) works to protect your financial interests during asset division, address potential alimony obligations, and advocate for fair child custody arrangements.
A financial advisor or Certified Divorce Financial Analyst® (CDFA®) will determine the best course of action based on your specific situation. They’ll create strategies for asset protection and division, help you save money on taxes, and provide a plan for post-divorce financial stability.
A therapist or counselor helps you keep your sanity and achieve a more amicable split with your ex-spouse. They’ll guide you through feelings of guilt or resentment, offer coping strategies for work-life balance during a tough time, and keep both partners focused on positive outcomes. This support can make the divorce process less stressful for you and your children.
The divorce process can be overwhelming, especially when you’re the primary breadwinner. But securing the right support can make all the difference.
A sage advisor (such as a CDFA®) will be your guide, helping you consider the long-term implications, instead of making hasty decisions that dent your net worth. Working with a CDFA® gives you an objective partner who is focused on getting you a fair deal. Approach your divorce with confidence—book a free consultation with our CDFA® today.