Evaluating Divorce From a Financial Viewpoint: What is in Your Best Interest?
Thursday, May 15, 2014, 1:00 AM | Leave Comment
Divorce can be an emotionally devastating even, but in addition to that it can have a significant effect on your finances. Getting divorced means you are splitting up your marriage, but you are also splitting up your material possessions. Only one of you can get the house, the car, and the antique gold necklace your husband’s grandmother gave you.
Therefore, before you head to the lawyer, here are a few things to consider in order to protect yourself:
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Plan a budget
Divorces take extra time, and stress, and they are also expensive. Go ahead and set up a budget for yourself now, so you won’t be surprised when you have to start forgoing your morning coffee once the divorce is under way.
Don’t be surprised if you have to cut back on a few things while you are paying lawyer fees and splitting up the savings account.
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Change your beneficiaries
Don’t wait until the divorce is final to change your will or cancel your soon-to-be ex’s insurance policies. Changing a will requires the service of a lawyer, so be prepared for the legal fees involved. Also, make sure your health insurance policy no longer includes your soon-to-be ex.
You may have to pay a bit to cancel their portion of the policy, but eventually that cost will even out. Also, make sure your life insurance beneficiary is changed. Again, this could require a financial burden, but it’s important.
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Figure out your taxes
Make sure that you don’t owe any taxes for the previous years. If you filed jointly, it will not matter if you don’t think you should have to pay the tax. The IRS will disagree. Decide how you will handle a tax return, if you are getting one before the divorce is final.
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Figure out what you will have
List your income and expenses and identify your assets. Assets are things you can prove should be yours in the divorce. For instance, if all payments for a joint mortgage have come out of your personal checking account, have proof of that in order.
Once the divorce is final, you will have to make sure you have enough money to support yourself and your family, minus your ex. You need to be prepared for that.
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Avoid large purchases
Maybe you just got a bonus at work, and you are dying to get a new car. Not a good idea right now. Any large purchase becomes a marital asset and could be transferred to your spouse in a divorce settlement. Best to just hold onto that money – in your own checking account. Until the divorce is settled.
Divorce is a messy business, but these things can help make sure your divorce is a little smoother. Financial considerations can be hard to think about when you are going through such an emotional time, but it is essential that you take the time to plan your finances accordingly.
Even the most amicable divorces will result in an extreme financial make over. Without proper planning, that can be disastrous for your bank account.
Information credit to Valerie M. Little Law Corporation, a Burnaby law firm.
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