Divorce – there is a better way

Divorce

Divorce, the and a Better Way.

This is an ongoing part of our multi-generational living series.

If the unhelpful events of Canberra of this past week have reminded us of anything – it is that the sum of divided individuals is far less than the of a united group.

It’s exactly what happens in a divorce when it comes to .

From my experiences in advising on property strategies for close to a hundred or individuals (mainly women) divorcing – this has been a lesson, I have seen time and time again.

But bang, it doesn’t have to be like this – it really doesn’t.

You can still “hate” each other and both get of out it relatively unscathed financially – if both of you can see things differently and care about your children first.

Yes, you can survive a divorce financially and come out in good shape and possibly even better (as a group) if you can;

  • Both look at a bigger picture, a longer-term one
  • Put your family’s needs ahead of revenge
  • Understand about lawyers, the good and not so good bits and how they are set up

Diagrammatically, below is how many dumb divorces work (the usual way) and how a few smart divorces can work (the better way).

Divorce2

The Usual Dumb Way

Husband and wife living in a family home with two children.

$3 million in value and a $2 million mortgage

A spouse moves out and it seems the only alternative is to put the home on the market.

  • In this down market, the costs of doing that are $100,000 in agent, advertising and conveyancing fees and bank stuff
  • Next, both spouses are left with $450,000 each and they buy a $1 million townhouse (cost of each in fees around $80,000 – stamps etc)
  • On top of that, they have had to do it through lawyers and let’s say $100,000 each put onto their mortgage.

So one year ago the family had $1,000,000 in combined net property assets $3,000,000 – $2,000,000 = $1,000,000

Now the family has combined $1,000,000 – lawyers ($200,000) – selling costs ($100,000) – minus buying costs ($160,000) = $540,000

But wait there is more

They sold in a down market (now), so they lost another $100,000 and they bought brand new poorly built townhouses/ (all they could afford) and they were only worth $950,000 each and so that’s another in total, $200,000 off your $540,000 new combined wealth and you are down to $340,000

But wait there is more

Your inflated townhouses/apartments grow at 4% over the next 10 years, as they are further out and so in 10 years your combined family wealth, for your children is $484,000.

About half of what it was before the divorce 10 years before.

But wait there is more

The family home (that you forced each other to sell) grew at 8% and so in 10 years was worth $6,000,000 and after mortgage of $2,000,000 = $4,000,000 in net family assets.

What’s that, 8 times the net family wealth if you didn’t sell.

Oh, but Mal, you’re not living in a real world, what about emotion and infidelity and mental illness and ………….

My answer back to you is always and what about your children, sir or madam?

What about yourself?

Give ground and avoid the lawyer’s deluxe fee version of a court fight, because even if you won 100% of the fight and sold the home = $484,000; you are miles behind winning 30% and the spouse or you keeping the home = $1,200,000.

Hold the phone – what about living together (we can’t do that anymore, she’s a bitch and he’s a bastard), what about bringing in the new model (wife or husband?).

Three very workable solutions to get divorced IF you don’t sell the family home.

  1. Whichever spouse moves out, you buy an for – using your equity in the family home, that you didn’t trash financially AND you buy it together (OMG)
  2. You deal in %, not $ – so going forward, you have percentages not dollars as far as divvying up. Even with new spouses, you can manage this. Keep the assets, divvy up the debt!
  3. Written lawyer approved agreements based on a dislike, even lack of trust for each other, BUT a love for your children and their family (which includes both of you).

It’s not practical Mal, not the real world!

I can be a very disagreeable character at times and my ex-wives will attest to that and largely they are right – but this time, the second time around, total lawyer costs were below $40,000 and no homes were sold. Wife stayed in the family home and I stayed in a jointly owned home.

This took three years to find a way forward and during that time by not selling the family home or any others, our assets went up $2,000,000 (2015 and 2016) and the cost was only $40,000 in lawyer fees.

At an appropriate time a transfer was made (no stamp duty as it was spouse to spouse).

My wife and I could see there was a real benefit for our children in finding a way to not sell homes. We have a testy at times but improving relationship today, live our own lives and have the same assets as we did 5 years ago – they are just worth a helluva lot more. It wasn’t easy, but it was a smart and caring way to see the best way forward for our children.

Blokes, you are not a real man if you financially beat up your wife (the mother of your children), if you trash your kid’s (flesh and blood) chances to have a future and you live in a shitbox apartment because you had to prove you were right and the courts didn’t agree with you.

We all witnessed the destruction one man unleashed on our whole nation this week, that is what revenge does. Yes, he was hardly done by a few years back, but he wasn’t a big enough man to put our nation’s interests ahead of his and suck it up. Instead, he cloaked his revenge in policy disagreements and involved us all in his fight. And for what? In the end, what did he achieve? Nothing, except to diminish himself.

Not mad at him, actually feel sorry for him – he is a man still hurting, a man unable to deal with his feelings in a constructive manner AND living in Canberra there are too many other agendas, for him to get some love and clear air, to start his road to his recovery.

So I put to you, the real tough guys in a divorce, the real men, take a little less, even when it’s all her fault and we all know it is (joke) and she’s gone ballistic at you (as she does).

Why? BECAUSE you’ve got a brain, some common decency and a moral compass AND you’ll end up in front AND your kids will too.

Your children want leadership from you, they want to learn how to act under pressure and still treat people with decency – they want to know they are loved more than your bank account scorecard. However, as shown above, the scorecard will come out in your and your children’s favour, if you can move your strategy goals from revenge to regeneration, from winners and losers to winners only and from all about you to all about your family (which you’re a part of).

Please don’t blame your lawyer – grow some and tell your lawyer you want a win for your family, not his, the lawyer’s family – put up with some unfair crap now (from the other side) and look for a family win by keeping the assets for you, your children and yes, even her (or him) intact – especially the family home!

Lawyers – some lawyers see you as a job and each job needs to be $50,000 to $100,000 in fees? Of course, they will find issues and before long you are knee deep in a court case and a combined $200,000 legal bill.

There are winners, but they are not you or your spouse or your children – they are your lawyers.

Not all lawyers are problems, in our case, we had good lawyers – we were the difficult ones.

Girls, if a bloke is actually trying to find a reasonable way forward for you, even if he’s done what you think is really bad and you don’t believe he deserves anything, this could be best for you and your kids (your kids remember them!).

On the other hand, if your ex is being a dick then never, ever, ever give up the family home – no matter what the pressures are – fight all the way to keep it.

It is your’s and your children’s financial good future.

Girls, pressure is pressure – being 70% stressed is no different to being 90% stressed, so try and keep the home.

Managing property through a divorce can work out for everyone, if you’re smart AND you really, truly love your family, your children AND you have smart end goals.

Divorce doesn’t have to mean the destruction of your family financially – well it doesn’t if you’re a real man (woman)!

These above opinions do not apply where there is a family violence situation. There will be arguments and raised voices and heaviness and hopefully you can get through those – try your hardest to keep the temperature down, rather than escalate through exaggeration (for you and your children’s sake). However, violence or threats thereof are unacceptable. Don’t hesitate to call the police immediately 000 or Lifeline 13 11 14.

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