Whether predating the marriage, evolving during the union, or arising post dissolution as a function of financial necessity, careers are a central theme in contemporary divorce - for both men and women. In this issue of Divorce and Money I discuss some of the key aspects of this complex problem.
One of the most complicated areas in modern divorces, particularly for the displaced homemaker, is how to resolve issues involving the spouses’ post divorce careers. The reasons for this are manifold: lack of case law precedents to provide adequate guidance; the complex inter-relationships among career decisions, quality of life, familial responsibility, personal independence, sense of self-worth, financial security, and impact on community resources; changes in workforce trends and the financial markets; the economic impacts of an aging population (e.g. healthcare costs and options); and the unique combinations of skills, assets, liabilities and familial circumstances of each case.
Given the scope of these factors, it is easy to understand today’s increasing trend toward using a team of professionals to coordinate the dissolution process. Career specialists, divorce financial planners, therapists, accountants, business valuators, benefits consultants, tax experts, and insurance specialists are all potential sources of expertise the modern family law practitioner may need to draw upon in developing a successful case. Making simplistic assumptions about employment options in the absence of the information these experts provide can prove disastrous to the financial health of clients. Unfortunately, collecting and evaluating this information is laborious and time consuming, albeit essential.
Anticipate, Investigate, Substantiate - Early
The sooner these issues are identified and documented in a divorce, the better the chance of finding an appropriate solution. As an example, developing a post divorce career plan for a stay-at-home mother married 20 years, with children still at home and limited job skills, takes time. If a vocational evaluation is involved, the process may be even lengthier. Evaluating the career assets of a working spouse, valuing investments and\or a closely held business, identifying “hidden” assets, documenting historical, current and future expenses, and other property settlement preparations are also time consuming. The results of such activities can (and should) have a significant impact on planning the career options of both spouses. Determining realistic alternatives early gives both parties time to emotionally adjust to and accept the subsequent reality of those options. Once established, that reality helps create a credible foundation for negotiating a mutually acceptable property settlement.
Myths vs. Realities
Modern divorces are often hampered by clients’ misconceptions, thereby increasing their emotional adjustment period. Keeping a divorce on track requires dispelling these myths and misconceptions early.
Many clients approach divorce with expectations of settlements that are unrealistic, or based on well intentioned but inaccurate advice, or just plain wishful thinking. Perhaps the most common misconception is that maintenance will be based on the length of the marriage. Therefore, the expectation is that, particularly in long-term marriages, a stay-at-home mother will not have to find a job after divorce. Case law in many states, including Washington, proves otherwise. While the length of marriage is considered, it is only one of many factors involved, and is rarely even cited as significant in establishing the duration of maintenance. (Note: Washington readers may find the article “Divorce Settlements: Shedding New Light on Old Assumptions” by attorney Hank Fields in the July 2006 Washington Bar News of interest in summarizing case law.) A spouse’s health, age, vocational viability, post divorce financial assets, and other factors are more likely to determine if employment will be necessary.
A second common misunderstanding is that because more people are working after typical retirement age (i.e. 65), the job market is more open to older workers, and there are ample opportunities for these people to earn significant incomes. It is true many surveys have shown an increase in employment rates for older workers. However, they also show a marked tendency for these jobs to be of substantially lower wage, shorter duration, fewer hours (many are part-time only), and have few or no health benefits compared to the jobs these workers held before “retiring”. Therefore, expecting a displaced homemaker in her mid to late 50’s will be able to provide a reasonable income, even after investing in retraining, especially if she is a custodial parent, is just as unrealistic as the first myth.
Property settlements and career plans are all too often based on the third common misconception that if financial parity is achieved at the date of dissolution, this will necessarily result in an equitable and satisfactory solution in the future. Tracking the income, expenses, liabilities, and asset depletion of both spouses into the future (at least 5, and preferably 10 years after the decree is granted) frequently reveals a disparity that may put one or both parties at substantial financial risk, even if both will be employed. Correcting such a problem by attempting to modify the settlement years after the divorce is difficult, if not impossible in most cases. The time to apply a correction is before the settlement is final. This may involve modifying the career plans of either or both spouses, selling assets (e.g. the marital home) to fund retraining or investment options, or reallocating liquid and illiquid assets to provide future cash flow.
Since 1995 a number of long-term studies have raised the potential of what may be a hidden fourth myth: that it is realistic to base future expense estimates on the current health and condition of the divorcing parties. For example, an Iowa State University study of women published in June 2006 reported a 37 percent higher incidence of physical illness among divorced women than their still-married counterparts. While part of this increase is shown to derive from a substantial difference in income levels (which were 50 percent lower for divorced females), it is also linked to a higher incidence of such stress generating events as job loss, reduction in health care benefits, and disciplinary problems with children – all of which occurred more frequently in the divorced sample. In my experience, dissolution professionals, including the courts, do not adjust settlement proposals to accommodate this expected increase in healthcare and related costs following a divorce.
Preserve Existing Career Assets
Dispelling myths is important to keeping clients focused on the realities of dissolution. But so is the need to ensure existing income streams are not put at risk during the dissolution. While obvious to the “objective” outsider, the need to protect existing career assets can be overlooked by the parties locked in a contentious divorce. Historically, men have had less difficulty with this than women working outside the home, but both need to insure their parting does not jeopardize the financial contribution their employment represents in the final settlement. Discussing their upcoming split with coworkers may generate some consoling commentary, but it is more likely to create concern about the divorcing partner’s attentiveness, commitment, and ability to fulfill key job responsibilities. Sharing one’s bitterness, anger, sense of betrayal, fear, or loss of self-worth or confidence in the workplace can be detrimental to job security and opportunities for promotion. Clients need a legitimate outlet for such feelings outside of the office. An effective team can ensure this happens.
Divorce should be treated as a source of revitalization at work. It is an opportunity to reassess goals and values, and focus on making work more meaningful in creating a balanced lifestyle. Career planning should emphasize this view of employment, rather than representing work as simply a financial necessity. That is one reason it is important to choose the right career specialist as a member of the client’s professional team in a divorce.
The stress and attendant changes in parenting responsibilities generated by divorce are often cited as reasons working women experience a drop in income shortly after divorce. It is important to recognize this can be a short-term effect, and most women readjust rapidly, given sufficient flexibility to adapt to their new role. Today’s job market provides much more support for these adjustments than women encountered just a few years ago. It is not likely both partners will be able to recreate a lifestyle equivalent to what they shared before the divorce, but with proper preparation - including career planning - they have a better chance of establishing a financially secure future.
Solomon’s Solution
The subtitle of this article suggests the need for Solomon-like judgment in addressing post divorce career issues. King Solomon would have had an easier task if DNA testing had been available when resolving the dispute between two women claiming to be the biological mother and seeking custody of a child. Without it, he relied on wisdom, and the character of the two women, when he suggested dividing the child (with his sword) between them. Of course the real mother refused the option, and was therefore given the child.
Dissolution professionals are often in positions to make, or at least affect, decisions as difficult and complex as Solomon’s historical dilemma. Now, as then, there is no equivalent “DNA test” to provide solutions. The contemporary equivalent of Solomon’s sword is the reliance on a court to make decisions about parenting, property settlements, career alternatives, and other issues a divorcing couple cannot agree on for themselves. Guiding clients through a divorce to establish an equitable distribution demands a similar kind of wisdom, and knowledge of the parties involved. The process also requires the active participation, and ultimately the commitment and good judgment of the client to create a fair solution.
There is no universal formula for ensuring an equitable settlement, nor for devising a satisfactory career that will meet the needs of the client. However, there are some activities that can improve the chances of achieving them:
- Identify and correct career misconceptions and errant expectations early - “Reality Check with Statistics.”
- Create the appropriate professional team as soon as possible.
- Monitor financial data gathering processes and keep them on track.
- Document third party/consultant/expert meetings with client.
- Ensure client job performance is satisfactory (third party monitoring).
- Invoke career specialist(s) as soon as is practical, if needed.
- Verify post divorce financial modeling is realistic, in an appropriate time frame.
- Keep career option discussions open, realistic, and objective.
- Encourage clients to maintain their job skills throughout their career.