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Divorce in a Downturn - Lower Costs With Litigation Alternatives

If you get the shakes looking at your investment statement these days, imagine how you'd feel if you were going through a divorce. It's stress piled on stress, and the more stress couples have, the more likely it is the divorce will get ugly. And the uglier the divorce, the more expensive it is. Which brings everyone back to the investment portfolio, or what's left of it after the latest market downturn.

For one couple in Texas, the process was especially painful. Separating in 2007 after 10 years of marriage, they held off on the divorce until the economy turned around. Over the next two years, they saw the value of their family business decline, the value of their home drop, and their investment portfolio -- including their retirement funds -- melt away.

They were caught in the worst economic slump since the Great Depression. Nationally, home values fell by more than 30 percent. Stock market investments declined dramatically. Consumer debt rose precipitously, to $11.7 trillion in August, double what it was 10 years ago. And the number of long-term unemployed workers grew to 6.6 million.

This couple knew they could not afford litigation, so they did what more and more couples are doing these days: They went alternative. Mediation and collaborative law do require that a couple work together to forge the divorce agreement, but both approaches minimize court time and costs and legal fees. And both will likely move faster than litigation, where many cases are delayed by jam-packed court dockets.

Splitting up assets isn't easy in a good economy, and the Texas couple was facing what so many families are facing now: splitting up devalued assets. But this is where collaborative law especially could help. Expert advisers can be brought in -- financial planners, lawyers, even mental health professionals -- to help craft an agreement. Mediation would not involve the experts; rather, the parties would sit across the table from one another and negotiate an agreement with the help of a skilled intermediary.

Of course, to end a marriage, you have to have the court's approval. Any agreement drawn up -- through litigation, collaboration, or mediation -- will have to be presented to a judge.

It's a tough road no matter which vehicle a couple chooses. But the trip can go faster and cost less if they go with an alternative to litigation.

Resource: The Wall Street Journal "Breaking Up Without Breaking the Bank" 8/28/10

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