Practical Tips on the Role of Finances in Divorce
Filing for divorce sets a number of wheels in motion that can have drastic, long-term and permanent consequences for both spouses. One pressing concern shared by most divorcing couples is what their finances will look like once the divorce is complete. Figuring out how to live on one income after years of dividing expenses between two is a big adjustment that should not be understated. While divorce does require the division of marital assets, the financial issues start as soon as divorce is contemplated, and continue well after the final decree is issued. The financial independence created by divorce can be freeing for some, but overwhelming and paralyzing for others. Taking control of finances early in the process is the best way to integrate financial changes into the divorce and should make the transition easier, rather than waiting for everything to be finalized before taking action. A recent article about the disastrous financial fallout of a protracted divorce on a retirement plan consultant, and the intense efforts needed to rebuild his financial security highlight the dangers of ignoring how divorce can shape one’s finances for years to come. A discussion of some key questions divorcing spouses should at least consider, and ways to minimize any potential negative effects, will follow below.
Key Financial Questions to Ponder
When the possibility of divorce starts to enter a marriage, one or both spouses may be reluctant to pull the trigger and be the one to actually file for dissolution. However, filing first can offer some financial benefits, such as:
- gaining time to assemble a qualified divorce team (attorney and divorce financial analyst if property division is complex);
- the opportunity to gather all relevant legal and financial documents, especially important if one spouse controls the finances or may have hidden assets – bank statements, tax returns, brokerage statements, estate planning documents, real estate records, retirement account statements, etc.;
- the ability to set aside money for divorce-related expenses; and
- making it potentially more difficult for the other spouse to hide assets, particularly if the timing of the divorce was unexpected.
Beyond deciding when to file, other considerations need to be addressed as part of the divorce process. First, determining what property would fall into the marital estate is necessary to understanding what assets the parties will need to divide, and consequently, the potential value of any settlement a spouse would receive. This analysis can become quite complicated if complex assets are owned, like businesses or separately-owned real estate, and may require obtaining an estimate of the valuation of certain assets so that a fair settlement may be reached. Further, one must assess whether enough money will be available post-divorce to cover expenses, and if not, it may be necessary to ask for alimony to ease the financial burden of divorce, at least for a temporary period of time.
Planning for the Future
Before the divorce is finalized, it is important to establish a budget that takes into account one’s new financial picture, which is important for making any property settlement last. Also, look at the types of assets likely to be received in the divorce to see what percentage would be liquid and available for use versus how many assets would incur penalties or taxation for liquidation. Finally, a realistic assessment needs to be made of the feasibility of keeping the family home over selling it and dividing the proceeds. An experienced divorce attorney can assist with all these matters, and should be consulted early in the divorce process since property settlements are rarely modifiable or overturned.
Seek Legal Advice
The financial implications of a divorce cannot be overstated, and an experienced divorce attorney is needed to ensure that any settlement reached is a fair assessment of the couple’s assets and adequately accounts for the circumstances of the marriage and the divorce. All Family Law Group, P.A. represent divorce clients in the Tampa Bay area, and strive to settle all issues as amicably and efficiently as possible. Contact the Tampa divorce attorneys and family lawyers at All Family Law Group, P.A. in Tampa Bay at 813-672-1900 for a consultation at no charge or email us.
by Lynette Silon-Laguna Google+