Family Law

Financial Planning for Divorce: Living Separately, Attorney's fees, Preparing for Accounts to Be Frozen

By Joseph Pandolfi, Retired Judge
Planning for the economic realities of divorce.

Are You Considering Living Separately?

Living together during a divorce can be a nightmare. Even if there's a degree of cooperation between you and your spouse, there's bound to be some tension, which isn't healthy for you or your children. Living separately is definitely something to think about, but not without first analyzing the potential financial consequences.

Let's look at two scenarios. In the first, you’re the primary bread-winner in the household, and you decide to leave the marital home and find your own place—as opposed to staying with friends or relatives.

You agree to pay all or some of the bills relating to the marital home. But before you make that move, you need to be sure you have the economic wherewithal to maintain two residences, potentially for a long duration. Contested divorces can often take a year or more to conclude. And once you start making payments, you may be establishing a precedent that will lock you into that obligation.

On the other hand, in that same scenario, if you leave without agreeing to pay any expenses for the vacated home, expect your spouse to successfully bring you to court and ask you to contribute toward those bills.

In the second scenario, you're the low-earning spouse. You want to stay in the marital home, and your spouse would like to move out. If the decision is open to discussion, the two of you need to determine if it's viable. Assuming you can't keep the house on your own, the plan won't work if your spouse can't make sufficient support payments for you to maintain the household.

If your spouse opts to move out anyway, and it's clear you won't be getting enough support to meet your needs, be prepared to go to court and ask for a support order.

Who Pays for Attorneys' Fees?

Ordinarily, spouses are responsible for their own attorneys' fees. But under certain circumstances—especially when there's a big income disparity—a judge might order your spouse to pay some of your fees. In the meantime though, your attorney is going to want an up-front retainer, as well as ongoing payments once the retainer is depleted.

At the beginning of your divorce, you should set some money aside for legal fees. Consult with a lawyer in advance, and get an estimate of how much money you'll need to get started.

If you have your own checking or savings account, there's nothing stopping you from using that money for attorney's fees. Just be aware that if the account contains marital funds, it may be considered a martial asset to be divided between you and your spouse as part of the divorce. If you withdraw all the money and it turns out that your spouse was entitled to a portion of it, a judge may have to adjust the division of other marital assets between the two of you to even things out when the divorce concludes.

If you and your spouse have a joint checking or savings account, you may be able to withdraw money from that account for fees. But since it's a joint account, normally it's not advisable to take out more than half.

Anticipate that the Court Will Freeze Some Assets

Once a divorce begins, it's not unusual for spouses to ask the court to freeze assets—particularly bank accounts. The purpose of the request is to prevent either spouse from emptying accounts and wasting available money.

Courts will typically grant requests to freeze assets. In fact, in some states like California, certain assets are frozen automatically when a spouse files the divorce petition (complaint).

However, the fact that a court freezes assets doesn't mean you won't have access to them until the divorce is over. Ordinarily, the court will order that some of these assets may be used to pay standard bills relating to maintaining the household, including child-related expenses. And courts often grant requests to use funds from frozen bank accounts to pay attorney's fees.

As with every other aspect of divorce, it benefits you to be able to work out an agreement with your spouse about dividing accounts. The more you can resolve together, the lower your legal fees will run.

In planning for the financial aspects of your divorce, it makes sense to consult with your accountant, if you have one. And you should definitely sit down with an experienced divorce lawyer in your area to learn what to expect, not just about the economics of divorce, but the entire divorce process.

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