Monday, November 2, 2015, AM | 1 Comment
If you are considering divorce or just starting the process, you may naturally be concerned about how ending your marriage will affect you financially. If you have children, own property or have considerable assets, the situation can be particularly complicated.
Here is a look at four major areas where you can expect to see the biggest impact to your financial status.
Real Estate and Property
Your property, including homes you own and the contents of them, will be divided up as per the conditions of your divorce decree.
You may be able to agree on this in advance of your official divorce, or you may have to go to court and let a judge decide if you can’t come to a consensus on your own or with a mediator.
Factors that can influence your property division include:
child custody agreements
ability to keep paying for the property
ownership of property prior to entering the marriage
names on the mortgage deed
You will need to open a bank account in your name only, and it is advisable to do this early in the divorce process.
Eventually, joint bank, brokerage and retirement accounts will be dissolved, once everything that is pending has cleared and once the disposition of the accounts’ contents has been determined.
You will also need to close joint credit accounts and obtain credit solely in your own name. This can be challenging if you have a lower income than your spouse or if you have a sparse credit history./p
pHowever, you do not want to be responsible for your ex spouse’s debts, which can happen if your name remains on any accounts, and you don’t want your information mistakenly entwined when it comes to identity verification or credit checks.
It’s smart to pull credit reports for a year or two after your divorce to ensure that you are not being penalized for anything incorrectly and that a true credit separation has occurred.
If you find errors in your reports, take steps to correct them, and double check afterward to make sure the right data has been entered.
Insurance and Estate
Any shared insurance policies will have to be cancelled and/or redrawn as well. If you have been receiving health insurance from your spouse’s policy, you will need to find your own, although it may be possible for any children to continue on that plan, depending on your divorce agreement.
Homeowners, liability and auto insurance policies also need to be transferred.
You will need to draw up a new will as well as any related documents like living wills and trusts.
If you have children, you may need to negotiate their guardianship in the event that you and your spouse both pass away before they are of legal age.
Alimony and Children
One of the biggest impacts to your finances can be how alimony and child support/custody is handled. This is another reason to engage an experienced attorney in family law in Salt Lake City or your specific locale to help with your divorce.
If you have been a stay-at-home parent, and your child support payments and alimony don’t cover your expenses, you may need to return to work or you may need to downscale your lifestyle accordingly.
Conversely, your income may be severely depleted by having to pay alimony and/or child support.
Sometimes, a more equitable custody split can take a bite out of your child support payments, but if there is a great income imbalance, the parent with the higher income often needs to pay a substantial amount.
This can also be affected by how long you were married and whether one spouse made financial sacrifices in the name of the other’s career.
Because real estate is often most couples’ biggest asset, it’s wise to consult a family law attorney to help make sure you are getting a fair deal and that all the paperwork is processed properly.
If you don’t sell the property and divide the proceeds, one party may need to file a quitclaim deed signing off on ownership of joint real property.
The person who receives the property in the divorce will need to refinance the mortgage in their own name, which could entail paying a higher interest rate as well as closing costs.
If you rent property, you need to decide how you will handle the lease.
You may be able to remove one name, or you may need to have a new lease drawn up if one party is staying.
You may also want to ride out or sublet the remainder of the lease and each find a new residence.
You may have to split your furnishings and household goods, and if so, spend money to replace items that your spouse retains.
Don’t forget about automobiles and vehicles like RVs. These will also need to be divided or sold and the proceeds allocated.
If you are financing a vehicle, the loan needs to be put in one name only, or the loan could be paid off.
As a final note, don’t forget to ask your divorce attorney about the tax implications of all of the above.
Once you have settled the legal issues surrounding your divorce, you probably want to consult a financial planner about long-term money goals.
Divorce can be a challenge financially, but with the best professionals on your side, you can still emerge financially healthy and ready to move on with your life.
Anica Oaks is a Freelance writer and web enthusiast. Read some of her published work on her Google+ page.