Unless one chooses a collaborative divorce, a divorce can last for several months or even years. During that time, a couple should work out how to cover the living expenses of each party and of the family.
In my experience, living expenses are easier and more pleasantly dealt with in collaborative cases, than in traditional litigated cases. In collaborative cases, the cash flow needs are a potential agenda item at every team meeting. This ensures that both parties are addressing their cash flow needs to the extent that the family finances can handle the dual households.
There are a number of ways to handle cash flow needs during a divorce.
Divide the cash up front. This process works well when both parties have similar income levels. Each deposits their paychecks into their own bank accounts (established during the divorce if necessary) and uses that cash to fund their living expenses. When one party has a greater income than the other, funds are allocated to the less monied party on a periodic basis. In collaborative cases, the two attorneys, the neutral financial professional and the couple will discuss and conclude the appropriate amount to allocate.
Allowance. This process arises when one party makes the majority or all of the income while the couple has two households. I have seen this method work and I have seen it have problems. The problems arise when the earner spouse wants to control the non-earner spouse’s spending habits. While, I understand why one party might want to control the other’s activities (although I do not condone it), this usually results in frustration and unpleasant feelings for both parties. In my experience, the allowance method works best when both parties are realistic about their cash flow needs and neither party wishes to alter the existing spending patterns of the other.