Updated: Feb 3, 2021
Creating a financial plan can help reduce stress
Late this summer, Legal Templates – a company that provides legal documents – announced a 34% increase in sales of their divorce agreement documents compared to the same time period in 2019. In addition, the jump in the number of Legal Template-users has provided shocking information about why so many couples are ending their marriages.
The data reveals that:
• Newlyweds were hit hardest by a significant margin;
• Couples in southern states were far more likely to seek a divorce;
• The rate of divorcing couples with children increased compared to 2019; and
• The number of life insurance policies and payouts required in divorce settlements soared.
At a time when nearly 50% of first marriages end in divorce already, learning the truth about this painful life transition is vital to both saving money and reducing stress. Unfortunately, despite living in an age of instant information access, myths about divorce are rife. This lack of understanding can damage your financial future short- and long-term.
The Lifestyle Myth
Strangely, many people believe their manner of living isn’t affected after the marriage is over. But the lifestyle they’re accustomed to is over. Taking one household and making it two guarantees that both parties make sacrifices. In many cases, those sacrifices are severe.
Outcomes in divorces vary wildly from state to state, and there is a fundamental lack of common sense in settlements. Settlements too often freeze a former couple’s financial situation in place. One ex-spouse has a lifetime financial obligation, the other is barred from improving his or her financial standing on their own.
Those going through a divorce should ask themselves whether the former spouse will always be able to pay. Because often, that long-term, often punitive spousal support keeps both spouses at risk. If the ex-spouse becomes disabled and cannot work, the former spouse can lose that court-ordered income, for example.
While they are never pleasant, planning in advance can help mitigate their negative impact. The simplest piece of divorce advice is that there are no do-overs, so it pays to get the settlement done right the first time.