Getting Your Finances in Order for Divorce

Everyone understands that a divorce can damage the finances of either spouse. Most couples who are divorcing go through the process without understanding fully how much of divorce will affect their finances.

Over the past 20 years, the divorce rate in the United States has been declining steadily. Still, approximately 40 to 50% of all US marriages will end in divorce. There are some things for you to consider to keep your finances in good health through a divorce, though.

Seek professional help: your emotions can take a huge hit through a divorce. You may feel sad and lonely at one point, then charged up with anger or fear the next. This constant roller coaster of emotions put you in a position where you are a lot more likely to make bad decisions. To keep you from making costly mistakes, you should consider getting advice from a financial adviser and divorce lawyer. Since women tend to be impacted negatively more by divorce than men are, this is especially important for them.

Get insured for support payments: when a divorce involves children, one partner is typically told to pay spouse port and/or child support to the other partner. The recipient of the support is typically the parent taking the most responsibility for raising any children. Liquidity can be a challenge over the long term with making these payments, though. Many times, the ex-spouse left paying the support may find themselves unable to continue making payments, leaving the other former partner shouldering the responsibility of paying the bills. When this happens, a financial adviser can run estimates on the assets from the marriage and take into account any risks, taxes, and liquidity to help the divorce lawyer come up with a settlement that is reasonable.

Take tax implications into consideration: in many divorce cases, taxes are overlooked. The ex-spouse is typically focus all their attention on dividing the assets. For example, if the 401(k) has $1 million in assets, it is worth a lot less than if the $1 million is in an account that is taxable. All this information needs to be taken into consideration as the assets are divided.

Follow the steps above to help you keep your finances in good health you ever face a divorce.

 

 

 

 

Protecting Your Assets and Finances in Divorce

If you are currently going through divorce, you are too emotionally drained to deal with any complicated financial matters. Unfortunately, you can’t afford to avoid these issues and allow someone else to is about your finances that will impact your future. If you want to keep your assets and finances intact, below are a few strategies to help.

Document everything: documentation is an extremely important factor when your property is being divided. Generally, whichever side has the most records and paperwork on their side is the one that walks away with their interests protected. You should, at the very least, have three or four years worth of paperwork from your joint or individual accounts. If your spouse is made a big purchase before the divorce is final using your joint account, this documentation will help your lawyer include their purchase in the process of property division.

Hire a good divorce lawyer: it is always best to have a good divorce lawyer on your side helping you protect your finances, even in a situation where you are divorcing your partner under good circumstances. Most common financial mistakes can be prevented by hiring a lawyer. This is especially important when you are going through a tumultuous divorce, or when your ex is unreasonably making demands for asset division or alimony.

Hire a financial planner: a financial planner will be able to help you in ways that any divorce lawyer is unable to. A financial planner better understands fees, interest rates, taxes, and all the other important numbers that divorce lawyers typically don’t. When you have your attorney work with a financial planner, it can expedite the process of having your assets divided and help make sure you are on top of your credit obligations and future tax. A financial planner can also help you protect your credit score through the divorce, preventing the financial decisions of your former spouse from affecting your ability to make financial decisions in the future.

As you can see, when you are prepared for a potential divorce, you can plan ahead to have your assets and finances protected.