It’s been more than a decade since my husband became my “wasband.” No regrets there. But as a mother of two, it took me years to recover financially from our divorce.
Experts are predicting a surge in divorces brought on by the stress of the coronavirus pandemic and spouses being quarantined together. According to some news reports, searches for divorce-related information have increased more than 30 percent since March and legal websites report that sales of templated legal separation forms have already spiked 34 percent.
Women should tread carefully and be particularly savvy at this time. A 2018 study in the journal “Demography” found that that while both women and men are hurt economically by divorce, men recover more quickly. “Women have disproportionate losses in household income and assets and increases in their risk of poverty and single parenting,” the study concluded. For men, divorce is an economic pothole; for women, it can be a cliff.”
Even if the pandemic has only solidified your determination to break free, you may want to take a few deep breaths and seriously count the cost.
Make sure it’s not just the COVID talking. Lockdown restrictions have made for a very trying time. Many families are facing economic uncertainty. Many are wrestling with childcare, distance learning and all of the other responsibilities that have been heaped upon parents — and disproportionately mothers. Bottom line: Things are not normal right now and nothing during this time should not be used as an indicator of the rest of your life. It may just be time for some virtual therapy — as a couple or an individual. That is, if you are not the victim of any physical or emotional abuse.
For others who are seriously contemplating a divorce, here’s some advice on how to prepare.
If you haven’t been sharing the money matters of the household, get a better understanding of your marital finances. Learn about all of the bank accounts and other assets, and to get copies of recent tax returns. Make sure you have assets in your name, including cash reserves and at least one credit card.
Financially preparing for the end of your marriage means painting a realistic picture of your future. Ask yourself what your housing situation will look like. Can you afford the mortgage on your own, or should you start looking at apartments? If you have kids, what school districts can you afford? Develop a budget, and leave extra room for late child support payments, emergency home or car repairs, and, especially now, medical costs. If you are the higher wage earner in your home, brace yourself for the possibility of paying your ex-husband spousal support — a tough realization for many women.
For higher-earning women, there are a few reasons the pandemic’s economic climate may work in your favor. A high wage-earner who has taken a pay cut or is facing job insecurity may be able to reduce the amount of support a spouse could get, thereby benefitting from divorcing while finances are less stable and income is deflated, notes Jacqueline Newman, the managing partner of the divorce law firm Berkman Bottger Newman & Schein in New York City.
“Generally speaking, the higher-earning spouse wants to file for divorce when the stock market is down and income levels are down because there is less to distribute and support packages can be lower,” says Newman, who is also the author of “The New Rules Of Divorce.” In the same vein, she says, the lower-earning spouse “wants to file when the stock market is high and income levels are higher because there is more to distribute and support packages could be higher.”
Illiquid assets like real estate could be especially difficult to put a price on right now, with so much uncertainty in the market. For example, what is the current value of commercial real estate? How much income will it generate? Where are vacancy rates going? How much are businesses worth at this time? These are important questions. “The best thing to do is to do in-depth scenario mapping of your settlement options,” notes Steph Wagner, Director of Women & Wealth at Northern Trust.
That includes reconsidering whether you really want the family home, and if so, what the best ownership structure would be. Wagner notes that in some circumstances it may be better to continue to co-own the property within a protected partnership instead of trying to take sole ownership and having to refinance in an uncertain real estate market. For example, if you get sole ownership and are unable to refinance to buy your partner out before the legal deadline, as a sole owner you will have to carry all of the transaction and closing costs, Wagner says. Moreover, if you eventually have to sell, the capital gains exclusion is much lower for a single owner.
Then there’s custody of children. It’s not only a tough issue emotionally. It often becomes a lynchpin for financial decisions, like child support and real estate. And the pandemic means mothers may be losing a key advantage in the fight for custody, Newman warns. Many times, the mother can make a case for custody by arguing that the father does not know anything about the medical care, school routines or daily habits of the children — but with everyone at home more often, fathers may be more knowledgeable about the children’s schooling, diet restrictions or daily habits than before. If this was critical arrow in your quiver, you may need to sit tight until post-pandemic life resumes or consider that this may not be your strongest move right now.
Speaking of timing, Newman says the most important advice is to make sure you have enough bandwidth during a pandemic to successfully pursue and succeed with divorce. “Divorce is full time job. Do you have time for a second full-time job?” she asks.
Sage advice I wish I’d had years ago.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Seals Allers is a journalist who has covered business and investing at Fortune, the New York Post and Essence.