I want you to meet two people – Kate and Kenneth. Kate is 46, Kenneth is 52 and they have been married for 18 years. They have two sons, ages 11 and 7. Kate is a school teacher and brings home $21,600 per year and Kenneth brings home $132,000 in his job as an engineer. They have a home, investments, a 401-k and a business that Kenneth owns and operates. Their assets are: home equity of $180,000, mutual funds worth $92,000, 401-k account of $212,000 and Kenneth's business with a value of $180,000.

Kenneth's offer to Kate is one 50/50 with Kate keeping the house and Kenneth keeping the business. Kenneth offers to pay $1,000 per month in child support and spousal support (alimony) of $1,500 per month for 5 years. Sounds good, but how does this affect each of them given their different salaries and the 50/50 split of assets?

Kate and Kenneth start with the exact same amount of assets but, as you can see, that quickly changes as Kate spends her mutual funds and her portion of the 401k to make ends meet. This outcome does not seem equitable to Kate and Kenneth. They try several scenarios and finally decide to structure the alimony so that Kate receives $5,000 per month for five years and then $3,000 per month for five years.

You can see that this last scenario has a better outcome for Kate. Kenneth pays more alimony but still has money to pay his expenses and accumulate savings because alimony is tax deductible for the payer and taxable to the recipient.

Now, many people will ask "Does this really happen?" The answer is simply this, if both people know the factual, financial outcome of a proposed settlement, they can see the pitfalls and are much more willing to negotiate in good faith. This means offering more or accepting less.

I can assure you that there is definitely life after divorce and the actions you take now will be the foundation for your future.