Divorce is a nasty reality for many. The thought of divorce is both devastating and heart-breaking, yet it is a common occurrence. The dedication and determination it takes to make a marriage work is no longer found in many marriages.
With divorce comes financial hardship, division, and fighting over material goods and financial assets. He said/she said is a game that is played out in the presence of attorneys and causes more hurt than help is often the lasting result. So, financial planning for divorce is essential in today’s culture.
Planning for divorce financially means stopping to look at all assets, investments, and make cuts when necessary. It means checking to see if you need budget auto insurance, a grocery budget, a new place to live, and a different job to support you. Divorce impacts every facet of your life so it’s wise to prepare accordingly.
If you aren’t prepared to tackle these decisions, speaking with a financial advisor will help you come up with a plan, understand your assets, and get an idea of what income you will need to make ends meet. Here are some key reasons why you should always consult a financial planner if you are on the heels or in the midst of a divorce.
Your Lifestyle Will Change
Divorce is always stressful, and that stress can be increased due to cultural events as well. Going through a divorce in 2020 may be a lot more stressful than in previous years due to the state of the economy based on COVID-19 and job loss. Not only is your life in a bit of turmoil outside of the pandemic, but now it is turned upside down because of divorce.
Life as you knew it is about to change. One of the major impacts of divorce is the toll it takes on your lifestyle. You may be living in your dream house that takes two incomes to support. Your children may attend costly private schools, and you may drive them to work in your new Lexus every day. Well, get ready, because the winds of change are blowing in your direction.
Any equity that has accumulated in the marital home may generally be considered community property if the home was purchased together. This may factor in your ability to keep the home in the divorce. It is common for women that have children in school to want to remain in the marital home after a divorce. Financially speaking, this may not be a possibility without some sort of additional support or employment.
One spouse may choose to buy out the other spouse on the mortgage in order to remain in the same house. If this isn’t a consideration, then it is likely that the home will have to be sold and equity divided according to the divorce agreement.
So now you will be faced with the task of finding a more affordable home in the desired school district and making sure you can make ends meet. Your furniture will have to be divided as well as other household belongings.
As soon as you decide on divorce, you need to remove your spouse’s name from your bank accounts, credit accounts, and any other accounts that your spouse may be beneficiary of such as retirement accounts and life insurance policies.
Open new accounts in your name and establish credit in your own name. Make sure you change your name on all accounts, policies, property, and professional documents if appropriate.
You will also want to verify that your ex removes your name from their credit accounts and bank accounts. You don’t want to be responsible for any financial issues that they may create.
For some unlucky couples, divorce can often lead to filing bankruptcy. This compounds the financial stress that separating finances can bring. So sit down and discuss the marital debt and personal debt. That may seem like a given, but you may be surprised to know that many spouses have no idea about their family/marital financial situation.
It is not uncommon for one spouse to be responsible for paying the bills and handling the finances in a relationship. However, when a marriage results in divorce, this leaves the unknowing spouse open to the shock of their lives if their spouse has accumulated huge debt without their knowledge.
If you feel that your marriage is headed towards divorce, start having the marital debt conversations now so you can speak to your financial advisor and prepare to split the debt or pay it off out of marital assets. The advice of a financial advisor here would be especially valuable.
This is always a tough subject. The custodial parent may want the world, but sometimes the non-custodial parent can’t afford the world. Other times there are disagreements about how much should be paid even if both parties are able to afford to pay the required child support.
There seems to be a common goal of trying to stick it to each other by way of child support and spousal support. Having a financial advisor to help you figure up the actual total of needed support will help you create a new, adequate budget to live off of.
Some states allow the amount of support received to be changed after the divorce is final based on financial circumstances, subsequent marriages, job loss, and custody changes. A financial advisor can also discuss this with you and advise if you should seek official legal advice.
Spousal support is a difficult financial topic in most divorces. However, if a judge orders you to pay spousal support, you will likely feel the financial strain immediately.
A disgruntled spouse may seek spousal support for a number of reasons. This is financial support paid in addition to and child support. It may be based on a percentage of your income but can also depend on the circumstances of the divorce.
Consult with a good divorce attorney if you have questions about spousal or child support, and you should also discuss options with your financial advisor.
Divorce is costly and hurtful. It is the separator of families and the disruptor of children’s lives. There are more people who are hurt in a divorce other than just you and your spouse, and your way of life may be shattered. Consider all options and talk to a financial advisor if you are considering a divorce. The old saying may prove to be true — it’s cheaper to keep her.
About the Author:
Robyn Flint writes and researches for the auto insurance comparison site, 4AutoInsuranceQuote.com, and she is a licensed realtor, a freelance writer, and a published author. Robyn is a successful entrepreneur who owns several small businesses.