Divorce - COVID-19 Style
Should you wait for better times?
Someone joked recently that their 401(k) looked more like a 201(k). Unfortunately, it’s not a joke; and for many people, it’s not funny. It’s especially difficult when parties in the throes of divorce based the settlement figure on information obtained earlier this year in the ancient BC era—BC as in Before-COVID-19. Assets in divorce are valued at essentially “time of trial” or a time reasonably close to time of trial. What if your “trial” is some months away in the fall? What do you do?
Accidents Happen
When litigants in a serious auto accident proceed to trial, the facts they are presenting in court, for the most part, do not change as a result of the passage of time since the accident took place. Either the light was red, or it was green; either the driver was texting, or they were not. Once the key incident occurred, the time and place are crystallized.
Divorces Evolve
Getting ready for trial in a divorce proceeding presents a different challenge. Matters in the family law court have been rightly called “moving targets.” A better visual is to assume that you leave a chess game at the end of the day, having made a move close to “Bobby Fischer” brilliance, only to get up the next morning and find someone has moved all the pieces around. The chessboard has not only been upended; it might even feel as if the entire room where it sat had been ransacked.
Even before a global pandemic, intervening life events can change the course of any person’s resolution strategy in their divorce: illness, death, joblessness, loss of customers/clients, and more. Any one of these events can alter income, decrease asset values, and expose the marital estate to a reduction in net worth. We have experienced a veritable train wreck of these incidents, with a corresponding degree of losses.
Coming into a year with such a promising number as 2020, we thought we would have a clearer vision of the future. Quite the opposite. The uncertainty brought the spring shutdowns have wreaked havoc on our society. People feel locked in fear and frozen by doubt. Investment analysts predict a substantial negative impact on assets in leisure time industries, commercial/office buildings, shopping center/retail properties, and multifamily residential housing. Many analysts believe we will see joblessness hitting Great Depression levels. The impact will vary depending on whether we actually get there, and how long we stay there.
Our Advice
We have not seen the last domino fall. COVID-19 consequences are still evolving. Your advisors can help you through some tough decisions. Your attorney is not the only one with perspective. Put a call out to your investment advisor, and your banker. How about your life insurance, long term care insurance, and umbrella policies?
It might be worth dusting off the box where your estate plan sits in the closet and looking that over as well. It could need updating—again. The real estate holdings might need a second look. Your personal assets could be more or less valuable since the last time you had an appraisal done. Meanwhile, if you wait six or twelve months, that wilted “201(k)” might be a 301(k) or looking like its old 401(k) self.
You might decide to stay together and wait for better circumstances. Or it could be time to continue with the actions you had started to take before California’s governor issued the shelter-in-place order on March 20, 2020.
Bottom line: The resolution strategy for your divorce game may need restructuring, and you might have to move some pieces on the chessboard yourself. While all would agree its nerve wracking, you don’t have to do it alone.
PLEASE CONTACT US IF YOU NEED OUR ADVICE.
Call: 949-756-0685 Email: dgold@tldlaw.com
Disclaimer:
This information outlines a few of the concepts that surround the financial aspects of divorce settlements during the COVID-19 crisis in the State of California. It is not intended to be, nor should it be construed as legal advice for any particular situation. Please seek advice from TLD Law or your personal attorney in your state or jurisdiction.
