Negotiating a divorce settlement

Even when Brangelina-sized wealth isn’t involved, divorce is likely to be the largest financial transaction of many people’s lives, set amid an emotionally charged time. And, as Hollywood supercouple Brad Pitt and Angelina Jolie may be finding out, the process can bring to the surface struggles for power, aversion to ambiguity and feelings of helplessness, as well as a host of financial pitfalls.

The following 7 deadly sins of divorce are based on observations of financial advisers who assist individuals and couples with navigating thorny financial decisions at the end of a marriage.

Anger, greed, sloth, pride, lust, envy and gluttony are all part of the ugly undertow in any negotiations involving divorce. Here’s how to avoid these deadly sins if you’re contemplating or already in a divorce.

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Anger © Dean Drobot/

It’s easy to understand why anger figures prominently in a divorce. Promises are shattered, trust is betrayed, feelings are hurt, hearts are broken.

“Anger is a common component of a failed marriage,” says Justin A. Reckers, a Certified Divorce Financial Analyst, or CDFA, and CEO of Wellspring Divorce Advisors in San Diego. “Letting anger cloud your view of the largest financial transaction of your life is a deadly sin.”

Individuals and couples should work to remove anger from their financial negotiations, advises Reckers, who specializes in the practice of collaborative divorce, bringing parties together to avoid divorce court.

“Parties who find the ability to negotiate the end of their marriage without anger will find themselves with more emotional and economic resources left after the divorce is finalized,” he says.


Greed © Monkey Business Images/

Greed is a common accusation hurled in the midst of a divorce settlement. After all, a dollar in one spouse’s pocket may be a dollar out of the other’s pocket.

Greed can be a deadly sin in divorce because irrational expectations lead to higher court costs and legal bills. According to divorce experts, individuals should set realistic expectations and understand the law of diminishing returns to avoid this deadly sin.

This is particularly important when a couple has been in business together. Diane Pearson, a CDFA with Legend Financial Advisors in Pittsburgh, has counseled clients “where greed is a reflection on business owners who tend to hide the true value of their business.

“They will show up in court with a W-2 Form,” for example, “claiming that is all they get out of the business, and it is usually the smallest slice they get from the business,” says Pearson.

At such times, she says, “We pull in business evaluation professionals who investigate the business’ assets and venues to find out their true worth.”


Sloth © fizkes/

Inertia, a longing for the status quo and ultimately procrastination can stifle divorce proceedings. To combat sloth, divorce experts recommend parties move forward in negotiating a divorce settlement and take control of their financial futures.

The first crucial step is to get organized, says Bradley H. Bofford, managing partner at Financial Principles in Fairfield, New Jersey.

“Ascertain what your total assets are and where they are. Then make copies of all your financial records, including bank and investment statements, tax returns, insurance policies, deeds and so forth,” he says.

Once the division of assets begins, you might consider mediation as a low-cost alternative to litigation. “Working with a mediator can help couples come to an amicable agreement quicker and reduce expensive attorney’s fees associated with a drawn-out battle for property,” Bofford says.

Remember, the longer you procrastinate, the more you stand to lose. So overcome the slothful excuses and take action to get the process completed as thoroughly, amicably and quickly as possible.

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Pride © anekoho/

Another deadly sin: You don’t admit you need help when your retirement planning becomes more complicated than you originally thought.

“A divorce is a lawsuit and a very complicated financial transaction,” says Reckers, who helps couples negotiate divorce settlements.

“Everyone needs to understand their rights and obligations under the law and how the law intersects with their financial picture,” he says. “Each party, at a minimum, should at least consult an attorney to have these rights and obligations spelled out.”

Pride sometimes causes people to take an untenable position in their negotiations.

“We have seen clients argue it was their individual hard work that made the family business successful and their spouse should not have a right to the fruits of that hard work,” says Reckers. “In reality, it was a joint effort during a marriage that created the success of the business, and courts will usually see it this way. Arguing otherwise is a result of an individual’s pride and is a deadly sin.”


Lust © Creativa Images/

Lust of the sexual type has ended many marriages, but the lust for power or control is a deadly sin of divorce proceedings. Many individuals negotiating a divorce settlement believe they can manipulate the process by withholding information or refusing to cooperate.

“When one of the parties, or worse, if both parties, in their lust for control, hide assets from their spouse, this is almost always discovered,” says Joe Heider, founder and president of Cirrus Wealth Management in Cleveland. “This results in prolonging the proceedings, which dissipates assets through increased legal fees, lengthening the process, and it also heightens animosity between the former spouses.”

Individuals should enter divorce proceedings with all financial data on the table and a level playing field to avoid a power struggle, he says.


Envy © Iakov Filimonov/

Many people talk about what happened in their friends’ divorces and think their own divorce proceedings should go the same way. This often creates envy of the other person’s circumstances.

Envying the position of another or assuming your financial circumstance is identical is a deadly sin. The way divorcing parties think is, “Sally got a million dollars. I should get a million dollars, too,” says Reckers, of Wellspring Divorce Advisors.

The result can be incorrect assumptions and irrational expectations. Envy of another’s divorce deal can lead individuals to turn down high-quality settlement proposals based only on comparing them with erroneous data points.

“Envy can often be described as a desire to deprive the other spouse of leaving with any assets at all,” says Heider. “It’s deprivation to the extreme. One spouse has the desire to deprive the other spouse of assets, happiness and financial security. They can drain them emotionally and financially through legal costs.”

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Gluttony | Fertnig/Getty Images

Gluttony means over-indulgence to the point of extravagance or waste.

“We have seen many clients enter divorce proceedings with bloated expenses or, even worse, no clue what they are spending or where they are spending it,” says Reckers. “Some are over-indulging in wealth items such as vacations, jewelry or expensive clothes.”

Pearson, of Legend Financial Advisors, adds she has been involved in situations “where the wife or husband want to divorce, hasn’t told the other party, and starts spending down the couple’s assets.”

Often this gluttony boils over into post-divorce life as well. Taking control of your budget will be the most important step in your transition after a divorce. Failure to do so can result in financial ruin for those who lack the skills and experience to earn the kind of living that would fund their desired lifestyle.

Avoiding financial gluttony can require lifestyle changes, but you can be rewarded with a prosperous financial future.