Preparing for Divorce

[Becki5676]

Long time reader, first time posting.  Hi all!  I am gearing up for a divorce.  No, there is no chance of avoiding it, husband is an addict, his behavior is unacceptable, etc, etc, etc. Ok, so I am currently in school working towards my LCSW. We have one child. My basic plan is to live off of my savings until I earn my LCSW, then fill the savings back up. Currently, I have a brokerage account with Vanguard which is split between bonds and stocks. Since I will be living off this money soon, do I close the Vanguard account and move it into my savings account? Thanks!

[mozar]

Without a full case study it's hard to say, but if I were you I would withdraw from Vanguard as little as possible on a monthly or biweekly basis. You might be able to figure out another option for cash (alimony, child support, part time job?)

[Becki5676]

Yeah I will ask for child support, but since my husband has suicidal tendencies I can't count on that income.  I plan not to ask for alimony since I have about 200k saved and I want to keep that instead of splitting it with him.

[Catbert]

Talk to a lawyer or otherwise investigate your state's law on divorce.  For example, I live in a community property state and your plan to take all "your" money to live on wouldn't fly. 

[frugaliknowit]

Sorry you are going through this.  Life WILL get better.

That said, it would be irresponsible for us to answer your question as phrased.

There are too many variables, including your risk tolerance.  There is a large range of possibilities using "plan for the worst and hope for the best".  You need to sort out your anticipated income and expenses (I would think your divorce lawyer could help), anticipated starting salary, and what would happen if you did not finish your degree (significant possibility, unfortunately), what the balance of your degree will cost, etc. 

Are you attending school full time?  Are you currently working outside the home?

[Becki5676]

I can ask to keep all my savings in exchange for him not paying alimony for years.  I am in CA.  Lawyer said that is an acceptable ask.  Yes, he can decline my request, but then he will need to pay alimony.  In the event he does request 50/50 split of our marital property, he is only eligible for 4 years of my savings, since all other years were pre-marriage.  I however, am eligible for splitting ALL of his savings (granted it is a MUCH smaller amount). 

Sorry if I am not being clear.  I am basically thinking that I am ready, budget/planning wise. I was just thinking that maybe now that the time is quickly approaching to live off the money I have in the market, I should move it into a savings account. That's why I asked :0) Figured you fellow mustachians would have some good thoughts!  I was torn between keeping it all in there (as mozar said) and pulling as needed vs taking it all out in advance...

Oh! and agree with you frugalknowit, life will get better but man is it tough to trod through this minefield.  Thanks!

[robartsd]

So, you entered this marriage 4 years ago with some savings built up that did not get spent in the marriage. Any funds you can trace back to this money without mingling with marital funds is your separate property. You also may be able to trace gifts/inheritances you received as an individual while married as separate property. If you can't prove that the property is your separate property, it is community property. Since you were only married for 4 years, you'd be unlikely to be awarded more than 2 years of alimony. I'd expect his lawyer to estimate what this alimony would amount to, compare it to the community property you're asking him to relinquish in exchange for no alimony, and advise him to not take the deal unless it is clearly less money (fighting means more money in the lawyer's pocket).

[smoghat]

There’s no way to time the market, but given the current situation, do what you can to avoid selling until the market comes back up. If you can wait at least a few months, you will likely be doing better although there is always a risk that, with Trump’s inept economic policies, he has managed to trigger a global recession. Still, I’d avoid selling anything now if at all possible. Famous last words of course.

[Reynolds531]

Maybe move six months into cash. Then every month pay yourself from Vanguard or you have a compelling reason (low prices) you can dip into the cash reserves. It's what I used to tell retirees.

Use stock money when it makes sense, use your cash reserves when that makes sense.

[LadyMaWhiskers]

Remove money from joint accounts that he could flee with. Consult a lawyer for state-specifics.

[partdopy]

So, you entered this marriage 4 years ago with some savings built up that did not get spent in the marriage. Any funds you can trace back to this money without mingling with marital funds is your separate property. You also may be able to trace gifts/inheritances you received as an individual while married as separate property. If you can't prove that the property is your separate property, it is community property. Since you were only married for 4 years, you'd be unlikely to be awarded more than 2 years of alimony. I'd expect his lawyer to estimate what this alimony would amount to, compare it to the community property you're asking him to relinquish in exchange for no alimony, and advise him to not take the deal unless it is clearly less money (fighting means more money in the lawyer's pocket).

I was wondering this myself.  It also takes into account separation time, so if you were separated before 4 years it will be even less.

As an aside, alimony (at least in the places I've lived) is only given if it can be established there was a reason you couldn't work (ie... you guys both decided you would stay home and raise the child).  Is this the case?

[Schaefer Light]

As an aside, alimony (at least in the places I've lived) is only given if it can be established there was a reason you couldn't work (ie... you guys both decided you would stay home and raise the child).  Is this the case?

Where I live, alimony is awarded anytime there's a difference in income between the two spouses.  I made more than my ex-wife, so I have to pay alimony.

[BicycleB]

@Becki5676, the liquidate to cash question kind of depends on how much you have and how much you need.

Just my opinion, but if your budget to the date of getting your degree and license is 190k and you have 200k, maybe you should get out of stock to ensure you don't lose 10% and end up short. If your budget is 110k, maybe stay 50% stock and 50% bonds or something like that, with shorter withdrawals as someone suggested. What kind of wiggle room do you have?

Fwiw, you can put the money into safe assets like a money market fund while keeping it in Vanguard. Bank account vs Vanguard isn't the only choice.

[SKL-HOU]

Do you want to have shared custody or even any kind of visitation for your kid without supervision for this guy? Suicidial and an addict does not sound too safe parenting. I bring it up because he may have the upper hand with the financials depending on what kind of custody/visitation you are ok with.

[mxt0133]

Yeah I will ask for child support, but since my husband has suicidal tendencies I can't count on that income.  I plan not to ask for alimony since I have about 200k saved and I want to keep that instead of splitting it with him.

For financial planning purposes, in the event that your current husband dies, his children are entitled to survivor benefits up to a maximum benefit amount, up to the age of 18.

[patrickza]

So sorry you're going through this. My wife's ex-husband was also an addict and she went through hell during their marriage. Happily she got through it an emerged well on the other side, and I'm sure you will too.

At the moment the stock market is very low, so you'd probably find better value in selling your bonds at the moment. I'd do that in as small quantities as you need until you're earning again.

[partdopy]

As an aside, alimony (at least in the places I've lived) is only given if it can be established there was a reason you couldn't work (ie... you guys both decided you would stay home and raise the child).  Is this the case?

Where I live, alimony is awarded anytime there's a difference in income between the two spouses.  I made more than my ex-wife, so I have to pay alimony.

And people still get married there?  What's to stop someone from just deciding to work part time for a year before divorcing, or quitting all together and just leaching off the former spouse?

[Schaefer Light]

As an aside, alimony (at least in the places I've lived) is only given if it can be established there was a reason you couldn't work (ie... you guys both decided you would stay home and raise the child).  Is this the case?

Where I live, alimony is awarded anytime there's a difference in income between the two spouses.  I made more than my ex-wife, so I have to pay alimony.

And people still get married there?  What's to stop someone from just deciding to work part time for a year before divorcing, or quitting all together and just leaching off the former spouse?

Not a damn thing.  A lot of people get married here or in other states with the exact same laws.  Alimony rulings are often devoid of any form of common sense or reasoning.  Some states still award lifetime alimony, so it could have been worse.  At least I only have to pay for half the length of the marriage.  Imagine getting stuck with alimony payments of several thousand dollars per month for the rest of your life.  That's enough to make a person consider suicide.

[frugaldrummer]

Just to temper that with the opposite viewpoint - imagine being a housewife for 30 years because your husband wanted you to stay home and raise the kids and do all the household work, while he put all his energy into his high-flying career, then he dumps his wife for a 30 year old and she is supposed to live on a minimum wage income?  (NOT my situation, but this IS why alimony laws are in place. Many women mommy rack their careers to some degree or another to accommodate childbearing and child-rearing and their contributions to the financial partnership that is marriage should be recognized as such.)

[Schaefer Light]

Just to temper that with the opposite viewpoint - imagine being a housewife for 30 years because your husband wanted you to stay home and raise the kids and do all the household work, while he put all his energy into his high-flying career, then he dumps his wife for a 30 year old and she is supposed to live on a minimum wage income?  (NOT my situation, but this IS why alimony laws are in place. Many women mommy rack their careers to some degree or another to accommodate childbearing and child-rearing and their contributions to the financial partnership that is marriage should be recognized as such.)

I get that.  And some alimony makes sense in those situations.  However, if the same woman (or man) had just been lazy and decided to stay home and watch TV all day then she (or he) would likely still receive the same amount of alimony.

[Ducknald Don]

There’s no way to time the market, but given the current situation, do what you can to avoid selling until the market comes back up.

There is no way to time the market but try and time the market?

[mozar]

Just to temper that with the opposite viewpoint - imagine being a housewife for 30 years because your husband wanted you to stay home and raise the kids and do all the household work, while he put all his energy into his high-flying career, then he dumps his wife for a 30 21 year old and she is supposed to live on a minimum wage income?  (NOT my situation, but this IS why alimony laws are in place. Many women mommy rack their careers to some degree or another to accommodate childbearing and child-rearing and their contributions to the financial partnership that is marriage should be recognized as such.)

Fixed it for you.