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Careful financial planning during divorce helps both parties define their needs
and understand that the available finances may not allow both parties to maintain
their pre-divorce lifestyle. For example, after divorce, money that was previously
used to support only one home must now cover the expenses of two separate residences.
Tim and Cathy
| Geoffrey and Theona
Tim and Cathy
Tim told Cathy he wanted a divorce after hearing her complain one time too many
that he worked too many hours and was never home. He promptly leased an apartment
three blocks away. They had been married for 8 years and had one child, Clark, age
two. Cathy had a full-time Nanny costing $50,000 per year to help with child care
even though she worked only two days a week. Tim was an attorney in Richard Nixon's
old law firm earning $590,000 per year plus bonus. In a good year, he earned $1MM
plus, but last year was not one of them. They lived in a three-bedroom apartment
on Manhattan's fashionable Eastside that had purchased at the top of the market
for $950,000 just over two years ago. Cathy's budget included a month's vacation
in Nantucket and Europe each summer with Clark and the Nanny, weekly food expenses
of $400, $19,000 in clothes, $5500 in shoes, and $100 per week for gymnastics for
Clark. In short, even though Tim was in the 99th percentile of earnings, they were
behind on paying taxes on Tim's partnership income as well as some other bills.
Cathy was a big spender and felt a strong sense of entitlement to the lifestyle
to which she had grown accustomed. In addition, she ran up some big charge bills
at Bloomingdale's with a new makeover coordinator.
I worked with both Cathy and Tim in mediation to develop a budget and lifestyle
that reflected Tim's income. I have worked on similar cases in matrimonial litigation
where my job was to show that the there was not enough money available after divorce
to support a high spending lifestyle and help the divorcing spouses develop more
realistic expectations and budgets.