Separation and divorce aren’t inherently complex processes. Local Rules, statutes and case law govern every step from filing to Decree. Equally strong currents may influence outcomes though, most notably for Americans today, the stock market and the economy. Like divorce, “the market” can be a roller coaster ride: You’re up. You’re down. You’re all around. The close of 2018 sounded alarm bells for investors. The beginning of 2019 brought a sigh of relief as stocks recovered. The “plunge” may seem farther away now, but don’t put your safety harness and helmet away yet.
A Little History
During the Recession in 2008, parties and perhaps, their counsel and courts, weren’t altogether prepared to assign and divide property between spouses whose marital estate took a nosedive when their retirement and savings tanked, the credit card companies reduced arbitrarily their credit lines and their houses wouldn’t sell.
Adding insult to injury were spouses stranded in their marital home together, who didn’t have any desire to be there, but couldn’t afford to buy or rent a separate space and whose house wouldn’t sell. Spouses with enough square feet moved upstairs or downstairs to physically create separate space, but those without it had to navigate already present tension exacerbated by fear of job loss and whether they would bounce back from the economic plunge, not to mention the standard grief over losing your marriage.
December 2018 marked the greatest loss to the stock market of any year since the Great Depression. While the Federal Reserve is raising interest rates to reconcile its balance sheets, Americans will likely see the results in:
- Higher interest loans available to them to purchase real estate in an already overvalued market,
- Higher rates to refinance real estate with less money paid to owner,
- Higher rates on credit cards,
- Increased rates to consolidate student loans,
- More expensive credit for businesses which will affect their bottom line, ultimately, all of which may decrease one’s credit score, making it more difficult to borrow money or credit at all.
Thus, whether spouses or couples are invested in the stock market or not or have retirement accounts through employers or those they rolled over prior to marriage, anyone in a divorce process or contemplating same (or contemplating marriage or cohabitation) must gauge their actions not only around the law of assignment and division but within what may be the greatest recession/depression we have yet to see.
Verified Financial Disclosures
Our courts in Kentucky require parties to exchange verified financial disclosures. I have included a list of documents a divorce client will need to gather and have at least a cursory understanding of why the documents are necessary on my website since its inception. While it’s true in my experience that one spouse generally handles the finances in the marriage, having no knowledge of each other’s earnings and investments and expenses and income tax liability and credit card balances is courting disaster.
Many Americans realized a 30% increase in their health insurance premiums going into 2019 for even basic policies with high deductibles and higher co-pays for prescriptions. If you are a spouse with an illness that requires prescription drugs, like Humira for instance, the cost for which is exorbitant for all but the 1% of the population without insurance, being aware of COBRA costs and whether your spouse would agree to a separation versus a divorce so you can maintain coverage within your spouse’s plan may be information on which your life or health depends.
Prepare Yourself
In divorce and separation, knowledge really is power. A foray into financial self-care might resemble a baby’s first steps, but in this economy, like a baby gaining its autonomy, is inevitable for present and future health. Take a few deep breaths, remember not to panic (It’s only money 😊) and take the plunge into your financial well being. You can’t control the market, but you can be conscious about your earnings and spending, monitor interest rates and act in your own best interest.