Going through a divorce is unquestionably a stressful and emotional situation. However, planning financially for a divorce helps protect your well-being as you move forward. Preparing for divorce in advance can help you to save time and money, ultimately removing some of the stress involved.
How to Financially Plan For a Divorce
Seek Out Advice – Bills related to a divorce can quickly add up, especially if you’re no longer living in the same residence. A financial advisor will help you with how to plan financially for a divorce, such as setting a budget to follow until the separation is legally finalized.
Know Your Banking Holdings – Many couples tend to have joint banking accounts, but it’s not uncommon for partners to have individual accounts. Either way, obtaining copies of those statements are helpful for your financial advisor and attorney. Also, know what’s in any safe-deposit boxes. Items in there may have monetary value that needs addressing while planning for divorce financially.
Keep the Spending in Check – You’re planning for divorce financially, so making extravagant purchases will not help your bottom line. It can also cause financial dilemmas when going through the process. Keep in mind that while getting a divorce, you are still tied to your spouse. A big purchase (even if necessary) like a car could result in that item going to your spouse.
Stay Home (If Safe) – This is a tough one. You’re divorcing your spouse for a reason, and it is common to no longer want to be near them. However, leaving your residence can impact your efforts when planning for divorce financially. One problem is that by leaving your home as the prime income earner, you may be responsible for paying half of the expenses associated with the house. If you’re not the prime earner, you may not have enough income or alternative arrangements for housing. Of course, if you’re in an abusive relationship, get out, and worry about planning for divorce financially later.
Know Your Assets – Stocks? Bonds? Retirement investments? Knowing what your investments are when planning for divorce financially is important. A financial planner will help you determine if those assets are jointly owned or not. That person can also help determine which of those assets are worth letting go of to your spouse and the ones that you need.
Receiving or Making Child and Spousal Support – Plain and simple, if a court decides you must pay child support, you will have to find a way to make it happen. When you’re determining how to financially plan for a divorce do not overlook monetary support to your soon-to-be former spouse and the kids – depending on custody outcomes. How much you will have to pay, or receive, is a state-by-state court decision. Your financial planner and an attorney can help estimate payments but you should factor these mandated obligations into your financial planning for a divorce budget.
What Else to Ask When Planning for a Divorce Financially
- How will employee benefits work after a divorce is finalized?
- What are the tax implications, for example, when it comes to receiving or paying for child and/or spousal support, and property assets?
- If you own a home or other properties, what will happen to them?
These are a few of the questions that can develop when financial planning for a divorce and the answers will depend on the state where you reside. Attorneys, financial planners, and other similar professional service providers can help you navigate through the complexities.
For more information about planning for divorce financially, contact Green Ridge Wealth Planning today.