A $1.5 Million Example of Why You Need a Good Divorce Attorney

I was reading an article the other day in the New York Law Journal about a divorce case that went badly awry for one of the parties. In short, a doctor was ordered to pay his ex-wife a $1.2 million settlement from ‘immediately available’ funds. Unfortunately, the doctor didn’t have $1.2 million in ‘immediately available’ funds, and was forced to withdraw the funds from his retirement account.

As you may know, most retirement accounts entail fees and tax penalties for early withdrawal, so the doctor was left with a $500,000 liability for the funds he withdrew to pay his spouse.

In the end, he was left with $850,000 in assets, while his ex-wife walked away with approximately $1.2 million in a settlement that was supposed to be equitable.

Where did things go wrong for the doctor?

There are a couple of ways in which the settlement turned out to be unfavorable for this newly-divorced doctor. First, the words “immediately available funds” in the settlement. If his divorce attorney had examined the settlement properly, she would have realized he didn’t have such funds immediately available. As his attorney, she should have changed the language in the settlement to remove the ‘immediately available’ from the stipulation, and to include some language that would enable the doctor the time he needed to obtain the funds.

Second, when he realized he couldn’t obtain the funds immediately, his divorce attorney should have gone back to the table to renegotiate the agreement. The attorney refused to renegotiate, and told him to come up with the funds in some other way.

Finally, the divorce attorney was not looking out for her client’s interests when he withdrew the funds from his retirement account. She failed to advise him that withdrawing funds from his retirement account would result in massive fees and tax liability.

If nothing else, at that point she should have gone back to the table and negotiate an agreement that would stipulate both the doctor and his ex-wife would split the tax liability. That would have left them both with roughly equal assets after the divorce. However, the attorney didn’t take this step, and the doctor was left with an inequitable settlement that he never should have signed in the first place.

The doctor is now out $500,000 in unexpected losses, and the attorney who was supposed to be looking out for his interests failed to get him the equitable settlement he deserved. This is one sterling example of why you need a good divorce attorney who has your interests in mind.