Don’t Forget the Financial Details

A divorce client mentioned she was considering allowing her husband to have three years to pay her the money he owed her from her share of their business. Giving him three years would reduce the considerable financial pressure on her soon to be ex-husband and his business. I told her I thought this was quite beneficial for her husband and reminded him she was entitled to the potential interest she could have earned on those funds had she received them at the time of divorce. If she did not ask for the interest, she would be walking away from $27,000. She had not considered this opportunity cost but, both spouses agreed it was reasonable to request interest at the rate of 5%. After all, that is the rate her ex-husband would have had to pay a bank to borrow the funds. This is a win-win solution.

This example demonstrates why those divorcing need to focus on the details and craft a fair settlement that benefits both spouses where possible. Just as with building a house or doing construction projects, the devil is in the details. Getting a financially smart divorce has very little to do with how intelligent you are or how much you pay for attorney fees. A fair and financially smart divorce considers all the details and understands all of the numbers before the papers are signed.