Divorce is difficult. Even in a country like USA divorce is difficult. In a country like India there is social stigma, and that makes divorce even more difficult and of course it is painful too.

The worst thing you can do is to make it more painful by bringing in complicated financial transactions. Lets see what hits you real bad:

  1. Division of personal assets: When you have been married for say 17 years invariably all the assets in the house have been acquired with a lot of money, love and effort. Dividing the assets is difficult emotionally of course, but the bigger assets – house(s), car, maybe even more difficult. If you have been lucky enough to have 2 houses, maybe it is easier, if not, one of you have to give up the house in favor of the other.
  2. Division of business assets: When the 2 people divorcing belong to the same profession – dentists, opthamologists, etc. there is this additional pressure to distribute the business assets too. The financial mess that we had created in the past visit us now with a vengeance. The assets acquired by the husband and the EMI paid by the wife, the guarantees given by the girl’s father or by the boy’s father – bring in emotions too. Well, one needs to handle these with more sense and less emotions. The more you complicate, the greater the pain and greater the fees for the lawyer and the accountant.
  3. Children’s future expenses: Children get used to turning to one parent for permissions and one parent for money. So when the 12 year old sees the split invariably they are devastated. The parents have to sit together and work with a financial planner. The parents have to do some SIP to meet the kid’s higher education and wedding plans. Some parents completely abdicate their part of the duty – so the single parent accepting the responsibility of the kid has to be ready for irresponsible behavior of their ex-partner.
  4. Division of Debt: Just as the assets are divided among the splitting couple, the debt also has to be divided. So the home loan, car loan, credit card debt have to be sorted out. So the best thing to do is to clean up the debt and cut up the card, however it may not be so simple. So sit with a financial planner, or accountant and work out a plan. The good news is that any debt that is only in one name will generally be the responsibility of that person; it’s very unlikely you’ll get stuck paying off your spouse’s credit cards. But the house mortgage? The new car payment? Joint credit cards? Those you may wind up having to pay off, depending on what the court decides. Even in an acrimonious proceeding, this is in the best interest of both parties.
  5. Tax troubles: you may have been paying some home EMI together – luckily in India you can still claim the individual deductions and you will go from being a spouse to being just a joint owner. Now one of you cannot prepay a bigger portion..etc. So sort out the loan repayment, ppf account, Lic policies – remember there is no incentive to keep your OWN policies live with your ex spouse as a nominee. So you may need to sort out some of these things too.
  6. Retirement plans: If you have opted for family pension – you may want to reconsider shifting to a single life – you may pay lesser contributions. You will have to change the nomination, make your children the beneficiary, and take all administrative steps with other assets like PPF, etc. too.
  7. Sheer dishonesty: what if you have co-signed a student loan for his brother’s higher education? what if the house is mortgaged for his sister’s education and you cannot now sell it? what about assets and liabilities that he has hidden from you?

Well divorce is not easy emotionally….but do not complicate it and further mess it up with the finances. Work with a lawyer, CA, and a personal financial planner…

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  1. I am seeing one mess right now. I know both the husband and the wife very well. This is a mess created by your favorite sector (wink wink), the housing loan sector by a bank. The house is the wife’s name. Wife paid the initial down payment, wife was to pay all the EMIs. When signing the housing loan application the bank wanted a co-borrower or co-applicant. Husband became the co-applicant. Wife is paying all the EMIs on time.

    Now the divorce is going on. The wife wants to sell the house off. Potential buyers have lined up. Bank wants both the borrowers to sign some papers to hand over the house/shift the loan or something. Husband is playing games and not signing. Wife has moved out to a different town while husband is enjoying the house. Staying rent free, EMI free as it is cut from wife’s salary. It is a comedy for a third person to watch but the pain the lady is undergoing is saddening to watch.

  2. Manju the person initiating the divorce has an immense advantage of knowing what is coming…but the other partner is normally in denial. She/he knows what is coming but refuse to see it….so the other person is less prepared and suffers hard. Real hard.

  3. [I will get a lot of flack from Subraji for this comment]

    Divorce is mostly in higher strata of society (in India), middle class is yet to be infested by this problem. Its mostly the women who calls the shot as laws are stacked heavily in the fairer sex.

  4. @Umang, really! Well I am middle class and knows many many couples getting divorces. Its a reality!

  5. @ Umang Jain : I’m a lawyer from Bangalore and I see divorces happening in every financial and cultural strata of society. Other cities also show the same trend.
    I observe the same trend even in rural areas and semi-urban areas. There the middle class is more likely to hide their marital distress than other classes.

    I think that this is a fine article that provides many starting points for estranged couples. You might want to consider the cases when the husband maintains the working wife in a manner way above her pay grade. At the time of separation, she will demand a huge maintenance / alimony to maintain the same status.

    Expensive Club memberships are also a source of friction in the divorce process.

  6. It is fashionable to talk about the pain of abala Nari but the way Indian laws are, it is a double whammy for the guys.

    They are the supposedly protector and provider and they have to fight not the wife but the whole system

  7. I’m not sure if things have changed in the recent few years but one of my ex-bosses went through a divorce and he said Indian laws are so archaic that there are only like 5 grounds for divorce – like betrayal by a partner, sexual disease, leprosy etc. “Differences” was apparently not a reason you can cite as grounds. Plus, things are very complicated because for example Indian law doesn’t recognise a divorce received in say the US so they had to go through the entire process in two countries. Pitch in a non cooperating spouse and things can get totally messed up wrt finances!

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