How to Minimize the Variable Costs in ‘Marital Assets Pie’ During Divorce

By Edward Goldberg

I fondly remember the “good ole days.” You know, the days when we would have in person meetings in our conference room with clients without a care about social distancing and wearing masks.

When talking to a couple about the financial aspects of their divorce, specifically division of property, I would draw a large circle on the white board representing the “marital assets pie.” I would typically draw a line down the middle representing that the pie would be split in two pieces, one piece for each spouse. I would clarify that I was not intending to give the impression that the pie would be split into two equal parts, but that more or less, given certain leeway for the particular circumstances of their situation, the pie would be split essentially in two. But then I would carve out another slice – a small slice, but another slice. Yes, I would intone, your pie will actually be split into three slices: one for you (and I would indicate one spouse), one for you (and I would indicate the other spouse), and I would ask the question, “Do you know who gets this third slice?”

Invariably, the answer would come back, “the lawyers?”

Wishing not to blame that entire third slice on only the lawyers, I would say something like, “Well, yes, the lawyers, but also potential court costs, costs of other professionals if needed, like if there is a business interest to be valued or if there are some particularly thorny issues with the tax returns, and so on. But what is interesting is that the most variable of the three slices is actually that third slice. That third slice can be larger or smaller, and of course the larger it is, the less you two have to divide. But the good news is the size of the third slice is largely determined by you!”

So the question then posed to my conference room captives would simply be, “Would you rather that third slice be larger or smaller?”

The answer was always, “Smaller, of course.”

How can you – a future client of mine or of any of the other divorce professionals you might encounter on your journey from a married person to a single person – limit the size of that future slice of the marital assets pie?

So here’s a bit on how to can make that happen.

First, do some homework. While it’s tempting to call a familiar or referred lawyer, choosing that means you will have already made the decision, albeit perhaps unwittingly, about what kind of a divorce you will undergo. Did you know not all divorces have to go to court? Did you know you could mediate your divorce? Are you aware that there is such a type of divorce known as “collaborative,” in which, while you each have your own attorney, it is kept private, polite and out of court? There are also other professionals who work in the field, such as mental health professionals and specially trained financial professionals. Prior to calling the attorneys, you might want to consult with other professionals, particularly those who also work in the field.

Second, be prepared. Gather together the financial information you know that is going to be requested of you – tax returns, brokerage statements, bank statements, mortgage information, 401(k) statements, credit card statements, etc. Ultimately, you will need to fill out a financial affidavit, which requires you to know your expenses. As you pull your financial data together, this will further prepare you for the discussions that will invariably follow. The more you know in advance about your financial circumstances the more quickly and efficiently will the discussions proceed.

Third, build your team. There are a number of people that can support you as you go through this experience. You don’t want to do this by yourself. Those that could help you, lend a shoulder, just be supportive when you need it could be a sibling, a close friend or professionals such as a therapist, your lawyer or a financial professional.

Fourth, be fair. Temper your expectations. Be realistic. One of you will not walk away with the house, all the cash and all the investments. This is, above all, a negotiation. Whether it is a hostile or an amicable negotiation is up to you. But know this: The angrier the process, the more it will cost you. Remember that third slice of the pie? No matter the circumstances that have brought you to this point, it will not serve you well financially to carry your personal loathing of your soon-to-be-ex-partner to the negotiating table. If you need counseling to help you get through this trying time, by all means, seek it out. You need to be sensible as you go through this process.

Lastly, look to the future. This too shall pass. There is a light at the end of this sometimes-dark and troublesome tunnel. The troubles that have brought you to this point are behind you now. Today is indeed the first day of the rest of your new life. Again, look to your support team as you move forward. Consider working with a financial professional to assemble – perhaps for the very first time – your very own financial plan for the future. Most of all, maintain a positive attitude as you begin this next chapter.

And good luck!