Do-it-Yourself Divorcers Beware

With all of the advertisements that are out there these days for DIY products, it is very tempting for couples to want to do all or a portion of their divorce on their own, thinking they are saving money by not having an attorney give them any advice or preparing any of the documentation. There are readily available resources on the internet for drafting your own agreement, so why not sit down with your spouse, come up with your agreement and be done with it?

First of all, unfortunately very few spouses can actually have a civilized conversation and agree upon all of the terms needed to resolve the issues necessary to obtain a divorce. You might have a check-list to go down, which is helpful, but is it specific to your situation? Is it based on the law in your state as opposed to a generic list supposedly for any divorce? Each state has different laws for the division of marital assets and for custody and support of children and spousal support or alimony. Without consulting an attorney familiar with the laws in your state, and one familiar with your unique situation, it is likely that any form agreement will not encompass everything that needs to be resolved in your divorce.

Some couples turn to mediation where a neutral party assists them in their negotiations. This is often a good way to resolve disputes. At least in Virginia, it is not necessary that your mediator have a law degree. And even if they do, they are not allowed to give the parties any legal advice. Most mediators will encourage the parties to consult with an attorney before signing off on the agreement, but often times the parties ignore this advice, thinking again that they can save money by skipping that step. Unfortunately, they may save money in that process, but sometimes they find out too late that there were things that were not resolved and it is now too late to do anything about it. This can result in a big price to pay in the long run for a rather small price to pay in the short term.

Just some examples that we have seen from DIY divorcers include the following:

~ Husband drafted agreement and characterized all of his payments to the wife as child support because he mistakenly believed that would make them tax deductible. It wasn’t until the next year when he was filing his taxes that his accountant pointed out his mistake.

~ Terms of a mediated agreement provided that the marital residence was to be retained by the wife. However, there was no provision that she was to refinance and remove husband from liability on the mortgage associated with the house. Husband signed the deed transferring the house to the wife. Wife failed to pay the mortgage and husband’s credit was ruined along with the wife’s.

~ Husband and wife together drafted their own agreement. A provision in the agreement stated that they would equally divide any joint bank or investment accounts, and keep any accounts that were in their own names. There was no listing of the accounts or the values within the agreement. Only years later did the husband discover that wife had taken out a substantial portion of a joint investment account and transferred it to an account in her name, so according to the terms of the agreement he had waived any interest in it.

~ Husband had worked at Philip Morris for over 30 years. The terms of the agreement drafted by the parties themselves provided that Wife would receive half of husband’s savings plan from Philip Morris and that Husband would receive half of Wife’s rather small IRA. Wife was unaware that husband also had a pension at Philip Morris which paid out at retirement over two thousand dollars a month. As this pension was marital property, she could have received up to one-half of these payments. Since she did not discover it until well after the divorce was finalized, the court did not have jurisdiction to remedy the situation.

~ In a mediated agreement, the parties agreed that Wife would receive $50,000 from Husband’s 401K, which was approximately half of the account value at the time the parties separated. There was no provision in the agreement for which party would take on the responsibility for preparing the Qualified Domestic Relations Order to accomplish the transfer, or for gains or losses on the account from the date of separation until the date of the transfer. Wife mistakenly assumed that Husband would take care of the transfer, and after several years and having heard nothing about it, inquired as to the status. As husband would not respond to her inquiries, she ended up having to hire an attorney to prepare the QDRO and then determined that the account by that time had had tremendous gains in value. Had she been entitled to gains on her portion of the account, it would have been close to $100,000. However, as this was not addressed in the agreement she only received the $50,000 and had to pay several thousand dollars to an attorney to get that.

You don’t know what you don’t know. So don’t make a costly mistake by trying to do it on your own. Do it right the first time.