10 Tips to Avoid a Costly Divorce

By Jessica Naziri, CNBC.com

Divorce. Your world is falling apart emotionally and financially. Even if you saw it coming, you were unaware of the financial ramifications.

Lawyers' fees vary widely, based on location and reputation. Circumstances - duration of the marriage, income and earning capacity - can all determine the outcome.

What's more, laws vary widely from state to state, affecting alimony and child-care judgments. In some states - Florida, for example - alimony can be lifelong, if the marriage lasted at least 20 years. In Texas, alimony is limited to three years and a maximum of $5,000 a month, regardless of the length of the union.

With so much at stake, it's important to be prepared. Treat divorce "like a business deal," says Jeff Landers, a divorce financial strategist and founder of Bedrock Divorce Advisors . "It can easily be one of the most important in your life."

Here are 10 tips from Landers for avoiding hardship during divorce.

See the full slideshow: 10 Tips to Avoid a Costly Divorce


Have a stash of cash saved.Have a stash of cash saved. 1. Emergency Divorce Fund
Have a stash of cash saved. Divorce proceedings can drag out, and if your spouse controls all the family assets, it will be difficult to have the resources necessary to hire a divorce team.

"I see this on a daily basis, where many affluent women have been out of the workforce for years and the husband has control over all the assets," says Landers. "The end result is that this financial squeeze might force you to sign a divorce settlement that is totally lopsided in your husband's favor. It not only becomes impossible to pay for the divorce fees, but to live."


Have all your personal and financial information accounted for.Have all your personal and financial information accounted for. 2. Get Organized
Having all your personal and financial information accounted for and organized will save you time and money. Provide it to your lawyer all at once rather than on multiple occasions to save billing time. It will also help you start to feel in control.

Landers says people tend to forget assets such as pensions, 401(k)s, IRAs, stock options, restricted stock, deferred compensation, life insurance, annuities, professional licenses, tax refunds, time shares, and executive perks. All of these items have value and should be considered during a divorce.


Your financial future depends on a good credit rating.Your financial future depends on a good credit rating. 3. Get a Copy of Your Credit Report

Your financial future depends on a good credit rating. If you are concerned that your soon-to-be-ex- spouse might charge a last minute shopping spree or a rendezvous to Paris on your joint credit cards or dissipate other marital assets, it's important to immediately get a copy of your credit report and resolve any disputes as soon as possible.

Even if your divorce settlement stipulates that your ex is responsible for payment of certain debts, if he or she does not pay them or declares bankruptcy, the creditors will come after you for payment.


It's particularly important to have a credit card in your name to help establish your own credit profile. It's particularly important to have a credit card in your name to help establish your own credit profile. 4. Open Accounts in Your Name

Upon entering into your divorce proceeding, open new financial accounts in your name, "but don't use the bank where you have joint accounts," advises Landers. It's particularly important to have a credit card in your name to help establish your own credit profile.

"Prepare yourself for the possibility that securing credit could be somewhat time-consuming and is likely to require more than simply filling out an application or making a single phone call," says Landers.


It's important to make changes to your will and other documents before divorce proceedings.It's important to make changes to your will and other documents before divorce proceedings. 5. Update Important Documents

It's important to make changes to your will, such as naming new primary and secondary beneficiaries. You should also revise other documents before divorce proceedings. While most divorcees are cordial with one another, you don't want your ex making medical decisions on your behalf. (You probably also don't want your ex to inherit all of your assets should you die before your divorce is final!)

Landers says that once divorce proceedings have begun, "an Automatic Temporary Restraining Order [ATRO], may be in place to ensure that both parties' assets and ownership interests stay the same until they have been divided pursuant to the final divorce decree."


Open a Post Office BoxOpen a Post Office Box 6. Open a Post Office Box

From the start of the process, you will need to correspond privately with financial institutions, your divorce team and others. Opening a post office box will ensure you receive confidential mail.





Social media such as Facebook and Twitter can be useful toolsSocial media such as Facebook and Twitter can be useful tools 7. Hire a Private Investigator

While private investigators have long provided evidence of cheating spouses, social media such as Facebook and Twitter can be useful tools, if the reason for your breakup goes beyond mere incompatibility.

Depending on the state, aggravating circumstances, such as adultery or marital neglect, may have an impact on alimony.

In North Carolina, for example, if a supporting spouse has committed an act of illicit sexual behavior, the dependent spouse is entitled to alimony.

On the other hand, in New Jersey, courts have rejected an alimony award based upon a spouse's acts of adultery.


There is no legal obligation in most states to pay college tuition, unless ordered by the courts. There is no legal obligation in most states to pay college tuition, unless ordered by the courts. 8. Set Up Children's Education Funds
While most parents want to do what is best for their children, there is no legal obligation in most states to pay college tuition, unless ordered by the courts.

In general, child support payments stop when children reach the "age of emancipation," which in most states is between ages 18 and 21.

But Landers says in the absence of a court order, the only way to secure funds for college tuition is to include the obligation in the settlement.

"You can have the funds put into an escrow or trust account to make sure they are available when needed, or get an up-front lump sum payment," he says.


 Hire a Comprehensive Legal Team Hire a Comprehensive Legal Team 9. Hire a Comprehensive Legal Team
Laws are changing so rapidly that it's even difficult for lawyers to keep up with everything that is going on. It's important to take the time to carefully select a team representing the three main components of a divorce - legal, financial and emotional.

During your research, find out ratings, fees, years in practice, practice breakdown and if there is any misconduct.

It's important to look for a lawyer with "good bedside manners, who is compassionate, persistent and competent," Landers says. "You not only want someone who devotes a majority of his practice to family law and divorce, but you also want someone you can get along with. After all, you will be divulging every intimate part of your life to this person."


Try to Settle Out of CourtTry to Settle Out of Court 10. Try to Settle Out of Court
While it may be difficult to come to a fair agreement on your own, Landers suggest avoiding court at all costs.
"When you settle outside of court, you put your fate in your own hands, but when you go to court you don't know what the judge is going to decide," says Landers. Moreover, when it comes to hotly contested cases, trials can cost two or three times as much as an out-of-court settlement.



See the full slideshow: 10 Tips to Avoid a Costly Divorce

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