When it comes to divorce and finance, there are many things to consider. For one, you need to make sure that both parties are on the same page regarding money. This means coming up with a plan for how you will split expenses, debts, and assets. You also need to think about what will happen if the court awards one person primary custody of the children. Will they have to pay child support? What happens if the court orders one party to pay alimony? These are just some of the questions you need to answer before parting ways.
With that in mind, here are five tips to help you out during this time:
1. Work with Professionals
In divorce, it’s important that you have a professional by your side who can help answer questions about finance and how it relates to divorce proceedings. An experienced divorce lawyer can be a wealth of knowledge regarding divorce and finance. They can help you with:
- determining what possible financial outcomes could be if a judge rules in a certain way;
- creating an effective and fair post-nuptial agreement, prenuptial agreement, or separation agreement; and
- helping you file all necessary paperwork with the court, among others.
You might also want to talk to a financial planner. Going over your finances and creating a budget can help you and your spouse see where there might be problems down the road, such as how to pay for mortgages, child support, or alimony.
2. Make Sure You Are on the Same Page When It Comes to Money
One of the most significant issues in a divorce is often how each party views and deals with money. If you and your spouse can’t work together regarding finances, you might be headed for trouble.
Both parties must see eye-to-eye on financial matters so that there aren’t problems later down the line. For example, you might be able to agree on how to split up assets. But what happens if one party doesn’t follow through? What about credit card debt? Or child support? These are the types of situations your attorney can help with.
3. Think About What Will Happen if the Court Awards Primary Custody of the Children to One Person
If the court awards either party primary custody of the children, the other party might have to pay child support. This is a financial obligation that helps offset the costs of raising a child. The amount of child support depends on certain factors, such as the income of both parties and the number of children involved.
The paying parent may also claim the child as dependent on their taxes, resulting in a tax break. Suppose you are the custodial parent and are not receiving child support. You should speak to an attorney about your options. You may be able to get the non-paying parent’s wages garnished or request that they pay in installments.
4. Prepare for the Financial Impact Divorce Can Have on Your Life
Divorce can be a stressful and financially taxing time in your life. Make sure you and your spouse go over the financial aspects of divorce so that you can both begin to see a brighter future.
Here are some aspects you must consider:
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Taxes:
If you were married, filing jointly with your spouse might be more beneficial than filing as a single taxpayer. If the court orders one party to pay alimony or child support, the amount of those payments will affect their tax return.
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Health Insurance:
You and your spouse can share health insurance coverage through an employer plan during the divorce proceedings. Once divorced, you can now be responsible for the total cost of coverage. You’ll also need to decide if both parties will continue utilizing the same health insurance plan or if you want to find a new one under your name.
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Debts:
When you divorce, it’s essential to determine what happens with debts, especially any joint credit cards and mortgages. If one spouse agrees to take on these financial obligations, they could be held responsible for the debt if the other party fails to pay their share.
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Living Expenses:
Certain expenses may need to change during and after your divorce, including housing costs. For example, you might have lived with your spouse in a single-family home but now need to find living arrangements for just yourself.
5. Prepare for the Financial Impact Children Can Have on Your Life
Whether you and your spouse have children or plan to start a family while married, each child will eventually impact your finances in one way or another.
Some of the ways that children can financially affect you include the following:
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Child Support:
If you do not receive primary custody of the children, you will likely have to support your kids financially. How much is determined by state law, but if the paying party fails to meet their obligation, you can go back to court for enforcement measures.
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Childcare Costs:
If you are working during the day and the other parent is not available to watch the children, you will need to foot the bill for childcare. Ensure you address these costs in your initial settlement to avoid any future strife.
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College Costs:
If you have kids, it might be wise to plan and start putting money away for their college education fund.
Divorce can be stressful and frustrating for many people, especially when finances are involved. Make sure you thoroughly plan out your divorce to avoid further complications.
