‘Do-It-Yourself’ Divorce Can Be a Costly Error

divorceRecently, a number of companies have been trying to persuade people that they can save money by handling­ their divorce on their own. These companies sell packets of generic forms in books or on the Internet, claiming that they were developed by “expert “attorneys and that they’re all you need.

Buyer beware!

These forms might be accepted by a divorce court, but they’re not tailored to your specific situation and the companies do not provide legal advice to protect you. Countless people who have used these forms have made mistakes that have cost them far more than they would ever have spent on a lawyer.

The sad irony is that the people who use these forms tend to be couples who are splitting up on reasonably good terms. They think they’re saving money -but the truth is that these types of uncontested divorces are the ones where attorney fees are low and where an attorney can provide the greatest “bang for the buck:’ because all of the attorney’s time is spent protecting you rather than fighting with the other side.

If you know someone who’s thinking of a “do-it­ yourself’ divorce, ask them these questions:

Do you know if you’re entitled to a share of your spouse’s pension, IRA or 40l {k) plan? If so, do you understand the highly technical require­ments you must comply with as to your spouse’s employer or plan custodian? A “divorce kit” generally won’t help you with this.

If you’re splitting up property, are you aware of all the tax consequences? Many people have done it the wrong way, and been surprised later with a large and unnecessary capital gains or other tax bill (A divorce kit won’t give you tax advice, either.)

  1. How can you be sure that your spouse doesn’t have assets that he or she isn’t telling you about?
  2. If your spouse promises to pay you money, and doesn’t follow through, how will you be protected? Or if your spouse promises to pay you money and later files for bankruptcy, how will you be protected?
  3. Do you know how to re-title property in separate names in a way that provides legal safeguards?
  4. Do you know every type of beneficiary designation that needs to be changed?
  5. Are you entitled to a share of your spouse’s stock options? Do you know how to divide them in a way that’s legally effective?
  6. Do you know what changes need to be made to your estate plan–after the divorce?
  7. Do you fully understand the effect of the divorce on Social Security, Medicare, Medicaid, health insurance, and other benefits?
  8. If you have children, have you taken care of them in terms of visitation and support? Will they be fully protected if your circumstances change in the future, or if your spouse’s circumstances change?
  9. What if your children incur large expenses in the future, such as for medical problems or college tuition? Does your divorce agreement deal with this in detail?
  10. What if your spouse agrees to pay child sup­ port, but dies unexpectedly? Have you provided for this, such as through a legally mandated life insurance policy?

If your head is spinning, it should be. Because the legal and financial implications of even the most simple, uncontested divorce can be profound.

You get what you pay for, and the legal conse­quences of doing a divorce on the cheap with an online kit can be very costly indeed.

Can You Avoid Probate By Placing Your Assets In Joint Names?

Vault Interior



Often, older people will add the name of one or more of their children to their checking accounts or brokerage accounts .They might do this to make it easier for the children to help them with their financial affairs. Or they might think that it’s a clever way to avoid probate.

Joint ownership can be good in some cases, but there are dangers in setting things up this way.

To illustrate, imagine that Anna has three chil­dren -Barry, Louise, and Todd -and she adds their names to some of her various accounts so they can help her with her finances. What could go wrong?

  • A CHILD’S DEBT | Suppose Barry loses his job, and runs up large debts. Since Barry is a joint owner of one of Anna’s accounts, his creditors could poten­ tially come after Anna for repayment Or suppose Barry owns a business and guarantees a loan.If the business goes under, Anna could be on the hook.
  • A LAWSUIT | Suppose Louise causes an auto ac­ cident, and the injured driver sues her. The driver might be able to empty Anna’s bank account as well as Louise’s.
  • A DIVORCE | If Todd gets divorced, his wife could potentially claim some rights over a joint account. If Todd’s wife makes a claim to divide an account, Anna might be required to trace and prove the entire his­ tory of her contributions to it.If she can’t do so, then Todd’s wife might have a claim on it.
  • A FAMILY FIGHT | When Anna dies, any assets in her joint accounts will go to the co-owners named on those accounts. If Anna has a will that divvies up her other property, it won’t cover the joint accounts. If Anna intended to ultimately split her property evenly among her children, that might not happen. And even if one sibling wants to make things right and offers to even things up with the others, this might create gift tax problems.

An estate planner can suggest alternative ways to avoid probate and allow children to help with finances.


Father’s Gift to “Y’all” Could Be Divided At Divorce

Fight For MoneyA father in Virginia gave his married daughter a check for $15,000, and told her it was a gift for “y’all.” The daughter and her husband used the money to fix up their home, which they jointly owned.

Later, the couple divorced.

The husband argued that the money was a joint gift, and thus he was entitled to a share of it in the divorce. The wife argued that it was a gift to her and that she didn’t have share it.

So the case turned on the legal definition of “y’all.” Did that refer to just the daughter, or the couple?

Be careful with family gifts if the recipient is contemplating a split.

A judge ruled that the gift was for the couple, and thus it could be split at divorce. This was partly because the father said he intended it for “y’all”: but also because the money was used to improve joint property – so regardless of how the gift was intended, it was converted into a joint asset.

The idea of a judge analyzing the legal significance of “y’all” might be amusing, but the larger point is very serious: If a person is contemplating divorce and also might be receiving a gift or an inheritance, it’s very important to speak with a family law attorney about how to make sure the assets remain separate.

There might not be a foolproof way to keep a gift or inheritance from becoming divisible at divorce, but you can improve your odds dramatically if you’re careful about how the gift is transferred, and if you make sure the assets aren’t put into a joint account or used for a joint purchase.