Understanding how your money works at the beginning of and during divorce.
A common fear at the beginning of a divorce is that the person filing will not have access to bank accounts or funds if they decide to start the divorce process. This can be an impediment to filing and a major source of anxiety. While this article is specific to laws and standards of the State of Michigan, it may have relevant information for all people going through divorce.
The last several people contemplating divorce who reached out to me all had this same paralyzing fear. They desperately wanted to file for divorce but were overwhelmed because they did not have access to marital funds. They worried about hiring an attorney while reasoning, “Who would work without a retainer?” They worried how they would manage to pay their living expenses after the case was filed and asked themselves, “How will I fill my car with gas or pay for my kids’ extracurriculars?” They felt stuck.
After working with divorcing clients for nearly 25 years, I know these concerns are understandable but should not prevent someone from filing. In order to get a handle on the specifics, I recently sat down with Oakland County Michigan family law attorney, Max Emmer, Esq. for guidance. The following are excerpts from our conversation.
How do you pay for an attorney?
Jacki: Max, first things first. What do I tell someone who says they want to file for divorce but don’t have access to money for a lawyer?
Max: Credit cards, today, are the most common form of payment for retainers and attorney fees and costs for a host of reasons. Many people do not have access or have $3,000.00 – $5,000.00 or more on hand or in a checking account to give to a lawyer. Credit cards are easier, more efficient and seamless to commence representation, especially since so much now is done via phone, email, Zoom and e-signature.
Ethics of paying for an attorney without informing your spouse.
Jacki: Is it okay for one person to charge legal fees on a credit card without informing the other? Clients are often worried about taking a misstep or getting “in trouble” for spending money on the divorce without getting consent from their spouse.
Max: Both parties have the right to legal representation and should have the same access to resources and funds for legal representation. While no lawyer will likely start a case without an initial retainer paid, if there is a disparity in funds or access, your attorney can formally (via a Motion with the Court if necessary) or informally (via a discussion with your spouse and/or their lawyer) to ensure access to marital funds for attorney fees and costs. Sometimes, clients get a loan or use a credit card of a family member or friend to initiate a case if they have concerns about their spouse seeing a bill before they speak with them or file.
Paying regular expenses like bills and spending money during divorce.
Jacki: What about daily living expenses? If you are not the primary wage earner or you do not have access to bank accounts or even credit cards, how is that handled?
Max: Once a divorce is filed, in theory, the parties’ finances and marital estate should remain as unchanged as possible. For example, if Party A was paying the health insurance before, Party A continues to pay the health insurance until a separate agreement is reached or the divorce is finalized. If bills were paid from a joint account before, that account shall remain open for bill paying until otherwise noted. If parties do wish to make a mutually agreed change to the status quo, they should memorialize that change with their attorneys. That could be done informally between the lawyers, or an Interim Order could be filed with the Court. If, for some reason, one party does not have access to sufficient funds for day-to-day expenses during the divorce, they can file for interim support (child and/or spousal) so those needs can be met.
How do you pay for unusual, one-time or big-ticket expenses during divorce?
Jacki: What about expenses that are non-recurring or unusual? For example, what happens if a bathroom repair is needed or if a trip is scheduled while the divorce is proceeding?
Max: I think parties should use their most reasonable judgment. If a toilet is broken, can a party call a plumber to fix it? Yes. Should a party undertake a $45,000.00 home addition during a divorce without discussion or approval? No. Anything more than a routine expenditure (say, $1,000.00, more or less, depending on the couple and their finances) should be discussed and approved.
Jacki: That makes sense! I always encourage clients to reach out to their attorney if they are unsure about any larger expense.
The most important takeaway from my conversation with Max was that even someone who is unfamiliar with or does not have access to the finances should not be afraid of moving forward with a divorce. Michigan courts anticipate those types of problems and already have mechanisms in place to prevent problems from occurring. To learn more about divorce resources and services at Pearl Planning, visit our divorce financial planning page.
Jacki Roessler, CDFA™ is a divorce financial planner with more than twenty five years of experience helping people going through a divorce evaluate the financial costs of divorce and advocate on behalf of divorcing clients. Visit Jacki Roessler’s biography here.
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