Pitfalls of a DIY Divorce
By Jennifer Segura
Sometimes we have people come in, and they ask if they can do the divorce process on their own. Our answer is yes, you CAN do a DIY divorce, but you also need to ask yourself, SHOULD you do your own divorce? It reminds me of the adage, “A lawyer who represents themselves has a fool for a client.”
Think about that. A LAWYER who represents himself…, we do not have lawyers who are coming in and asking if they could or should handle their own divorce, the individual typically has absolutely no legal background or education.
The financial ramifications of a divorce can last a lifetime; that reason alone should make you want to gain as much professional input as humanly possible. This should not only include a lawyer or a mediator, but also, a financial person, a therapist, a realtor, and anyone else who may specialize in something specific to your case.
Ok ok, so I am not referring to a couple who have been married for two years, are 20 years old, have no kids, no property, and no real assets or debts of any significance. This couple, yea, they can likely get away with a pretty simple process…probably shouldn’t do it on their own without any feedback, but ultimately, even if they screw it up, there is not likely to be too much of a loss.
No, I am referring to those who have been married for 5, 10, 20+ years—those who have children, a home, a business, retirements, investments, and more. There are so many places that were merely checking the wrong box that can determine a complex issue for you, and the court will not accept… “my bad, I didn’t know…” as an excuse to fix whatever is broken.
Worse than checking the wrong box, you may waive significant rights to something because you do not understand the asset or its potential value. Take a pension, for example. If you print out a statement of a pension, it may reflect a value of $20,000. If you are not aware of how a defined benefit account works, you may think that splitting the account $10k each is fair. This would be a big mistake. The value of the pension today is not telling us much of anything. At some point, when the employee retires, he or she will receive monthly payments from that pension, for life. Depending on the amount of those monthly payments, you may have given up a considerable chunk of change. Again, once the agreement is final, there is no going back to amend it, unless both you and your spouse agree to the change. You have to assume, if it means the employee spouse will lose a large sum of money, they probably will not agree to make the change.
How about knowing how to transfer a retirement asset, like a 401k. There are ways to divide and transfer these assets within the divorce process that will not result in tax liability or a penalty to either spouse. There are even ways to pull liquid cash from a 401k NOW (when you are not anywhere near retirement age) without a 10% penalty if you do it through the proper channels. Very few laypeople know about this exception, and it can make a HUGE difference when trying to equalize the parties’ assets.
Overall, there are so many pitfalls that one can fall into when trying to go about any complex legal process without guidance from an informed professional. There are absolutely ways to go about the legal process and complete it ALL with proper guidance, for way under $8,000. The amount of money your divorce professional will save you in mistakes, or help you to navigate ways to keep your home or liquidate a retirement account to pay off joint debts, is far too valuable to ignore. At the very least, talk to someone, get the information, then make an educated decision as to what path is best for you and your spouse.
Are you thinking about a DIY divorce but just want some guidance before you begin? Contact San Diego Family Mediation Center at (858) 736-2411. We can assist you with the paperwork and any other hiccups along the way.