Don't Pay Your Ex's Legal Fees
A client should begin liquidating joint assets under the premise that these moneys can be placed in a liquid account (such as a money market or savings account) to pay the fees associated with the divorce. Of course, if the assets are joint, then the ex-spouse will have to sign off on it. Ultimately, both spouses can be held responsible to pay divorce debts either during the process or afterwards.
If the ex-spouse puts legal fees on a credit card, your client is still liable for the debts if the card is held jointly. That's because the primary breadwinner supposedly has the money to pay the bills. You might recommend to the client that he or she consider taking out a joint loan to pay those bills. Perhaps a home equity credit line makes sense. The client can also numb the sting by deducting the expenses on his or her taxes. It is generally not a good idea to go into debt.
Jeffrey H. Rattiner is president of Rattiner's Financial Planning Fast Track Inc., an accelerated educational program satisfying the CFP Board educational requirements to take the CFP Certification Examination. He can be reached at [email protected] or (720) 529-1888.