A financial checklist before heading for a divorce

Britney Spears, Paul McCartney, Sharon Stone and even our own Saif Ali Khan swear by it. For, they also proclaimed their love through every possible action. But the vow that these love-birds once took —Till death do us part — couldn't stand the vagaries of the unassuming life. There have been cases — Michael Jordan and Steven Spielberg — who had to shell out $150 mn and $100 mn, respectively before they could walk out of their marriage.

Well, you may have dismissed these cases as celebrity gossip but the stark reality is that today divorce is not limited to Page 3 columns or family-drama tele-serials. Here are some steps that can help you keep a clean financial slate before you head for splitsville.

Strategy to adopt

Financial planners feel that a wiser strategy for couples who have decided to part ways would be to go in for a pre-nuptial agreement that clearly outlines a fair division of property, personal possessions and financial assets. "The couple's house is usually a major bone of contention. If the property has been purchased jointly and is in both spouses' name, matters become more complicated. Thus, an agreement is better than fighting over a favourite piece of furniture or pet in the process of dissolving the marriage," reasons Milind Rai, a certified financial planner.

According to him, it works as a multi-pronged solution. While in case of men, it protects them from exorbitant divorce settlements, in case of individual earners, it makes sure that nothing, not even a joint account, can become a point of dispute. And for a woman, it is an especially important document as it enables her to assert rights and ensure that she is not done out of her just dues.

For couples who have decided to split, it is important that they keep emotions away from influencing their financial decisions. "It helps one coming out of the divorce process in a better financial state. So a clear don't is not to follow the heart," says Monica Singhania, a tax planner and reader at leading Indian B-school, Faculty of Management Studies, Delhi University.

Clarity of ownership of assets is also essential as the Indian law does not believe in the community of marital property. "This means that any assets acquired during the course of marriage belong to the person in whose name they're bought. An unscrupulous man could buy assets with his wife's salary but in his name, and it would be virtually impossible for the woman to get anything in case of a divorce," explains Rai.

How is alimony decided?

If you have read stories of American men shelling out huge alimonies, then get real. As in an Indian scenario, according to financial planners, a women can only expect one-fifth of the husband's pre-tax (roughly a third of his post-tax) income as alimony.

As per the Hindu Marriage Act, the husband is expected to take care of the woman's 'reasonable' needs through alimony or maintenance after divorce. "The court decides the maintenance amount, depending on the husband's income and property, the woman's income and property, and the couple's individual financial needs," explains Sunil Doshi, a chartered accountant.