11: Exploring Financial Relationships and Divorce Flashcards
Definition of Alimony
A court-ordered provision to a spouse after separation or divorce. It is typically in the form of payment to the former spouse.
Definition of Child Support
Court-ordered payments, typically made by a parent to the other parent, in some form of payment that has been court-ordered, for the support of one’s minor child or children.
Definition of Common Law Marriage
A situation where a couple may live together and present themselves as married. Depending on the state’s statutes, they may be legally recognized as married, requiring a legal separation or divorce if the relationship ends.
Definition of Legal Separation
A legal arrangement made by a couple, typically following a court order, to live apart while remaining married.
Definition of a Prenuptial Agreement
A legal contract and agreement made by a couple before marriage concerning the ownership of respective assets should the marriage end.
Definition of a Qualified Domestic Relations Order (QDRO)
A judicial order in the United States, entered as part of a property division in a divorce or legal separation that splits a retirement plan or pension plan by recognizing joint marital ownership interests in the plan.
Consistency of Money as a Source of Couple Conflict
Research consistently shows a significant relationship between money problems and couple conflicts. Money is consistently reported as the most common point of disagreements, even in newlywed couples.
Intensity and Persistence of Money Conflicts in Relationships
Conflicts relating to money are found to be more problematic, pervasive, and recurrent than other issues like communication, leisure, and chores.
Link Between Financial Factors and Marital Satisfaction
Approximately fifteen percent of marital satisfaction is predicted by financial factors, such as financial management quality and financial problems.
Increased Risk of Divorce Due to Frequent Financial Arguments
Couples who argue about finances more than once a week increase their risk of divorce by approximately 69% compared to those who do not argue about finances.
Impact of Perceived Good Financial Status on Divorcing Couples
Interactions between partners of a divorcing couple are much more positive and supportive when coinciding with the perception of a good financial status.
Psychological Impact of Divorce and Money
Disagreements regarding finances tend to be emotional and may often trigger defensiveness. Divorce and partner separation are linked to increased levels of depression, anxiety, and risk of alcohol abuse.
Relational Impact of Divorce on Family and Children
Children of divorced families initially have more emotional and behavioral problems than children from high-conflict, non-divorced families.
Financial Impact of Divorce Generally
Evidence suggests women and children experience significant financial declines following a divorce, whereas men’s financial status often remains stable.
Financial Impact of Divorce on Custodial Parents
Following a divorce, the parent who gains child custody will on average experience a 52% decrease in his or her household income.
Financial Impact of Divorce on Women
Women, on average, tend to experience more severe and longer-lasting financial losses than men after a divorce.
Financial Impact of Divorce on Men
Many men report resentment in sharing family assets with their ex-wives.
Preparing Finances for Separation and/or Divorce - General Advice
Know divorce laws in your state, gather all financial documentation, track income and expenses, prepare for future expenses, be conservative with spending and saving, refrain from big financial decisions.
Why is understanding relationship dissolution relevant for CFT-I™s?
Divorce rates are approximately 50% in the US, making it highly likely you will work with clients experiencing it.
Examples of Mental Health and Relational Professionals for Referral
Marriage and Family Therapists, Social Workers, Clinical Psychologists, Licensed Professional Counselors.
Examples of Financial Professionals for Referral
Certified Divorce Financial Analyst (CDFA), Financial Advisors, Certified Financial Planners, Accredited Financial Counselors.
Examples of Legal Professionals for Referral
Mediators, Divorce Attorneys.
Key Conclusions about Money and Relationship Dissolution
Money dynamics often intersect with relationship conflict and dissatisfaction. Money conflict is often a precursor to relationship dissolution.
Define ‘alimony’ in divorce proceedings.
Alimony is a court-ordered provision for a spouse after separation or divorce, typically in the form of regular payments to the former spouse.
How does ‘child support’ differ from alimony?
While alimony is payment to a former spouse, child support consists of court-ordered payments, typically made by a noncustodial divorced parent, specifically to support one’s minor child or children.
What is ‘common law marriage’ and which states recognize it?
Common law marriage is a legal arrangement where a couple who lives together and presents themselves as a married couple may be legally recognized as married without a formal ceremony, depending on state law. States that recognize it include:
* Colorado
* DC
* Iowa
* Kansas
* Montana
* New Hampshire
* Oklahoma
* Rhode Island
* South Carolina
* Texas
* Utah
Define ‘legal separation’ and how it differs from divorce.
Legal separation is an arrangement by which a couple remains legally married but lives apart, typically following a court order. Unlike divorce, the marriage is not dissolved, but the arrangement addresses living arrangements, finances, child custody, etc.
What is a ‘prenuptial agreement’?
A prenuptial agreement is a legal contract made by a couple before they marry concerning the ownership of respective assets should the marriage end. It typically outlines how property and finances would be divided in case of divorce.
Explain what a ‘Qualified Domestic Relations Order’ (QDRO) is.
A QDRO is a judicial order in the United States, entered as part of property division in a divorce or legal separation that splits a retirement plan or pension plan by recognizing joint marital ownership interests in the plan.
According to research, what position does money hold in couple disagreements?
Research shows that money is consistently reported as the most common point of disagreement, even in newlywed couples.
How do money conflicts compare to other types of couple conflicts?
Even when financial difficulties aren’t the most pertinent issue for a couple, conflicts about money are found to be more problematic, pervasive, and recurrent than other issues such as communication, leisure, and chores.
What makes money conflicts particularly damaging to relationships?
Money conflicts tend to:
* Be rated by spouses as more intense and significant than other conflict topics
* Are more likely to be mishandled
* Often remain persistent and unresolved compared to other marital issues
* Can trigger emotional responses related to self-worth and personal vulnerabilities
Approximately what percentage of marital satisfaction is predicted by financial factors?
Research indicates that approximately 15% of marital satisfaction is predicted by financial factors, such as financial management quality and financial problems.
How does frequent financial arguing affect divorce risk?
Couples who argue about finances more than once a week increase their risk of divorce by approximately 69% compared to those who do not argue about finances.
How does perceived financial status affect interactions between divorcing partners?
Interactions between partners of a divorcing couple are much more positive when coinciding with the perception of a good financial status.
What is the statistical divorce rate in the United States?
Divorce rates in the United States are approximately 50% overall. However, first marriages have a lower rate, while subsequent marriages have higher divorce rates.
How does having multiple divorces affect an individual’s financial situation?
The more divorces one has, the more severe the financial impact tends to be. With each divorce causing significant financial setbacks (averaging a 52% decrease in household income for the custodial parent), multiple divorces can create compounding financial hardship.
List three psychological effects commonly associated with divorce.
- Increased levels of depression
- Increased anxiety
- Higher risk of alcohol or substance abuse
How does divorce typically affect an individual’s reported happiness and fulfillment?
Immediately following a divorce, individuals commonly report significant declines in levels of fulfillment and happiness compared to immediately prior to their divorce.
Why might individuals make impulsive decisions following divorce?
Post-divorce impulsive decisions may result from:
* Emotional distress and psychological impact
* Uncertainty about the future and loss of identity
* Attempting to regain control over life circumstances
* Coping with increased anxiety and depression
* Adjusting to new life circumstances that weren’t part of their original plan
How does financial stress related to divorce affect psychological wellbeing?
Financial stress from divorce can:
* Intensify feelings of insecurity and anxiety
* Create practical worries about basic needs
* Reduce resources available for self-care and support
* Affect decision-making abilities
* Compound existing emotional difficulties of the divorce process
How do children from divorced families initially compare to those from high-conflict, non-divorced families?
Children of divorced families initially have more emotional and behavioral problems than children from high-conflict, non-divorced families, suggesting that the divorce process itself is highly distressing.
What is the impact of exposure to parental conflict about money on children’s long-term outcomes?
Exposure to nonviolent parental conflict, such as through money fights, greatly increases the likelihood of post-divorce depression and alcohol abuse in early adulthood, regardless of demographic factors.
How does financial strain influence parenting after divorce?
Financial strain often leads to more harsh, ineffective, and inconsistent parenting, which further impacts the welfare of children.
What is the connection between parental hostility post-divorce and parent-child relationships?
Parental hostility post-divorce is linked to parental distancing and reduced involvement in the relationships between parent and child.
What is the average decrease in household income for the parent who gains child custody?
Following a divorce, the parent who gains child custody will on average experience a 52% decrease in his or her household income.
How do the financial outcomes of divorce typically differ for men and women?
Women, on average, tend to experience more severe and longer-lasting financial losses than men after a divorce. Men’s financial status often remains stable and sometimes even increases.
How does divorce affect the risk of poverty for mothers?
Divorced or separated mothers are 2.83 times more likely to be living in poverty than those who remain married.
What are the main reasons for the financial disparity between divorced men and women?
The disparity typically results from:
* Women more often gaining primary custody of children
* Increased financial burden of raising children
* Limited ability to work outside the home due to childcare responsibilities
* Historical wage disparities between men and women
* Incomplete or inconsistent payment of child support or alimony
How does divorce affect a household’s relationship with government benefits?
Divorce often greatly increases a household’s dependence on government benefits, as the reduction in income necessitates seeking additional support.
List four key financial preparations someone should make when facing potential divorce.
- Gather all financial documentation
- Track income and expenses
- Prepare for future expenses during and post-divorce
- Be conservative with spending and saving behaviors
Why is it important to refrain from big financial decisions during divorce?
It’s important to refrain from big financial decisions during divorce because:
* Emotional distress can lead to impulsive decisions
* The final financial situation post-divorce is still uncertain
* Legal proceedings may affect asset division
* Decision-making abilities may be compromised by stress
* There may be future financial obligations not yet determined
What challenges might arise when tracking post-divorce expenses?
Challenges include:
* Maintaining two separate households on reduced income
* Lack of visibility for the non-primary custodial parent regarding how child support is spent
* Differing perceptions about necessary vs. discretionary expenses
* Adjusting to a new standard of living
* Managing shared expenses for children
Why is it important to take caution with financial advice from friends and family during divorce?
While well-intentioned, advice from friends and family may:
* Not be accurate or applicable to your specific situation
* Be based on their personal experiences rather than your circumstances
* Not account for variations in state laws regarding divorce
* Be emotionally charged rather than objective
* Not consider the full financial picture
Why is understanding divorce relevant for Certified Financial Therapists?
Understanding divorce is relevant because:
* Divorce rates are approximately 50% in the US
* Financial therapists will likely encounter clients dealing with divorce
* Divorce is emotionally and psychologically distressing
* Financial implications of divorce have long-term effects
* Financial decisions during divorce are often not made logically or with planning
What unique insight can financial therapists offer during divorce proceedings?
Financial therapists can:
* Help clients understand the emotional aspects of financial decisions
* Assist in preparing realistic post-divorce budgets
* Help clients balance emotional needs with financial realities
* Provide objective guidance when emotions run high
* Help clients establish financial independence and literacy
When should a financial therapist refer a divorcing client to other professionals?
A financial therapist should refer when:
* Legal questions arise that require an attorney’s expertise
* Complex financial situations require specialized analysis (CDFA)
* Severe emotional distress requires mental health intervention
* Mediation might be beneficial for resolving disputes
* Issues arise that are outside the financial therapist’s scope of practice
How might a financial therapist help a client who was not the primary financial manager in their marriage?
A financial therapist might:
* Provide basic financial education and literacy
* Help establish independent financial systems and accounts
* Assist in creating a realistic post-divorce budget
* Address emotional aspects of financial independence
* Build confidence in making financial decisions
Name three types of mental health professionals who might work with divorcing clients.
- Marriage and Family Therapists
- Clinical Social Workers
- Licensed Professional Counselors or Clinical Psychologists
What specialized financial professional might be particularly helpful during divorce?
A Certified Divorce Financial Analyst (CDFA) specializes in the financial aspects of divorce and can provide expertise specifically related to divorce finances.
What is the role of a mediator in divorce proceedings?
A mediator helps divorcing couples reach mutual agreements on various aspects of their separation without going to court. They facilitate communication and negotiation to create an amicable plan that works for both parties, which can be more cost-effective than litigation.
How does collaborative divorce differ from traditional divorce proceedings?
In collaborative divorce:
* Both parties agree not to go to court
* Each spouse has their own attorney
* Financial specialists and mental health professionals may join the team
* All parties work together to reach mutually beneficial solutions
* The process tends to be less adversarial and may preserve better post-divorce relationships
Why is it important for financial therapists to take a systemic stance when dealing with divorce?
Taking a systemic stance is important because:
* The entire family system is affected by divorce, not just the spouses
* Children experience significant impacts that affect their wellbeing
* Extended family relationships may also be affected
* Financial implications ripple throughout the family system
* Solutions need to consider all parts of the system, not just individuals
How might a divorce affect extended family relationships from a systems perspective?
From a systems perspective, divorce may:
* Change relationships with in-laws and extended family
* Shift family roles and responsibilities
* Alter holiday and tradition arrangements
* Impact financial support between extended family members
* Create boundary and loyalty conflicts for family members
How does a systems perspective help understand the long-term financial impact of divorce?
A systems perspective helps understand that:
* Financial impacts affect multiple generations (parents, children, sometimes grandparents)
* Changes in one part of the system (e.g., reduced income) affect other parts (e.g., educational opportunities for children)
* New relationships and possible remarriages create complex financial systems
* Resources may be stretched across multiple households
* Financial roles and responsibilities shift throughout the family system
From a systems perspective, how might divorce affect a child’s future financial behaviors?
A child’s future financial behaviors might be affected by:
* Observing financial conflict between parents
* Experiencing financial instability during formative years
* Developing attitudes about money based on post-divorce dynamics
* Learning money management from parents who may be financially stressed
* Having reduced financial support for education and early adulthood
