One of the primary issues a family law specialist deals with in divorce is helping his or her clients resolve their financial issues. An experienced family law attorney can help you not only divide your property and assets, but your debt and liabilities as well. A divorce attorney will utilize the best methods to put your entire family in the best financial position possible as you move forward into unfamiliar post-divorce territory.
Sometimes the community possesses complicated financial assets, like investment and retirement accounts or stock options, and a forensic accountant might be brought in to help analyze, value, and divide your property. A forensic accountant can help unravel the essential financial formulas that might affect not only the division of community assets, but also child support and spousal support. Forensic accountants can be expensive, however, and they’re not right for all divorces. In a divorce case, a little common sense can go a long way when it comes to dividing community property. The key is to think about how you’re going to preserve what you have in this dramatically volatile economic environment we live in.
My belief is that we are in the middle of the greatest economic free fall that we’ve ever experienced in this country during my lifetime. The United States Congress says that the U.S. dollar has lost 96% percent of its value since its inception in 1913. Some economists say that we are in the middle of witnessing 90% percent of the global wealth changing hands of ownership. Whose hands are your wealth going into? Will you and your family have anything left?
The purchasing power of the U.S. dollar, which is what we live and eat on, is down to an all time low, so low, in fact, that the U.S. Congress is contemplating bringing back the gold standard to back it. At this time, more than ever, income, expenses, assets, debts, savings, and investments, should all be at the forefront of the minds of family law attorneys helping you divide your community assets in a divorce. If you as a divorcing spouse aren’t considering your personal state of financial affairs, as it relates to your family’s future financial reality, and the value of the assets that you can take with you in your split, you could be in for some major surprises and disappointment.
TRUE INVESTMENT CAPITAL ONLY COMES FROM SAVINGS
Unemployment in this country is at an all time high. Even if you have a job, inflation affecting everything you buy probably keeps you from being able to actually save money. One of the greatest issues for family law attorneys in dealing with divorce is financial disagreement between the spouses, which is compounded by the fact spouses just aren’t saving enough in real value, so they end up fighting each other tooth-and-nail to squeeze every ounce of wealth they can out of whatever community asset they have left. So be it for inflated assets. Sets of silverware are being split down the middle because divorcing spouses have not been saving. They’ve barely considered the true valuation of their assets up to this point in their lives.
Savings are important because they form the cash cushion that gets us through difficult economic times. We get the best value out of our assets by saving for them first. A lack of savings is one of the major problems we face not only as individuals but as a country during these economically challenging times. Economic researcher Chris Martenson, PhD, MBA, says that savings are important nationally because they are utilized for the formation of investment capital; that is, the property, plant and equipment that create actual future wealth.
Same thing applies to spouses in a marriage. If you are going to want to be able to invest in the “property, plant and equipment” of your future, so you have some future wealth to be able to preserve for your family, without having a giant debt load attached to it, you’re going to have to save for it first. True investment capital can only come from savings.
INDIVIDUAL’S SAVINGS RATES AT ALL TIME LOW
According to Martenson, savings rates have plunged to historic lows, “levels last associated with the Great Depression.” Martenson says the personal American savings rate has steadily declined in America since 1985 to the present. The decline we have experienced as a country and as individuals has resulted from “a culmination of a multi-decade erosion of savings as a cultural attribute of American citizens,” Martenson says. Now, many of you are realizing this in your own lives, where you’re having problems making ends meet on a week-to-week basis, with nary the time nor thought given toward investing in yours or your children’s futures. The truth is, you can barely deal with financing the now. And you’ve probably got a lot of debt to go with it.
Martenson, a futurist and co-founder at PeakProsperity.com, believes that what a history of persistently declining savings tells us is that there is an “implicit assumption” by the majority of people in this country that unlimited credit will be available in the future, and so we don’t need to save now. We have assumed a lifestyle where we have largely substituted a “save and spend” mentality, with “a buy it now on credit” mentality.
All debt across all sectors in this country, and personal savings of individuals, shifted in opposite directions in 1985, with the gap widening dramatically ever since. “Our national tolerance of debt shifted drastically upwards beginning in 1985 right as our national approach to savings was beginning its long decline towards zero,” Martenson says.
The marketing of our financial system has created in us a belief that in order to have a grander and brighter future, we are going to need more money, which equates to greater debt, so we can buy things. We have become a country of mass consumers fueled by credit availability. Everything is about beating the Joneses, now, the future be damned, and the Joneses have a lot of credit at their disposal. The idea has been ingrained in us that low savings plus high debt equals prosperity, or what Chris Martenson calls, “at least a perpetual feature of our future economic landscape.”
THE BOTTOM LINE FOR DIVORCING COUPLES
The bottom line for most Americans has become that of low savings rate and high debt, which is a major problem because it means that most divorcing spouses have a very thin safety cushion to ride out the economic hardship we are experiencing at this time. This equates to the fact that most people have failed to invest in their families’ futures. Dealing with the present while preparing for the future has posed a difficult task for most Americans, and, as a result, divorcing spouses have little left to divide. They’re not alone in this. A lack of savings is a nationwide problem.
Our bottom financial line to get through these difficult times has to be pretty straight forward from here. Save as much as possible, now, and get out of debt. Many financial forecasters predict that a credit freeze is imminent. Prepare for it. Know the truth of what’s really going on in the world, and with our banks. When possible, move those hard-earned savings into assets that will hold or increase in value during this time of the declining U.S. dollar. The theory behind hard earned savings, and the investment thereof, should include a ‘smart plan’ on how to preserve those assets for future family needs.