Four tips for staying financially afloat during divorce

Four tips for staying financially afloat during divorce

In addition to causing a major emotional impact, divorce often involves a huge financial blow to the parties involved. Before the divorce, both parties have the financial assistance of the other spouse in meeting financial obligations. However, once the divorce is completed, individuals find themselves in control of their finances and must pay the bills and save for retirement without a spouse’s income.

Although it can seem daunting, there are some steps couples can take to make sure that their assets are protected and they don’t end up financially ruined.

Keep it civil

Although a good attorney can save you money on your divorce in the end, one surefire way to eat up your funds is to have a bitterly contested divorce. Pick your battles with your spouse wisely, or your money will just go towards paying for legal fees

Also, you can save money on legal fees, by keeping your divorce as simple as possible. You can do this by working with your spouse to gather and organize information on all assets, investment or mutual funds and retirement pensions before you call an attorney.

Be careful about what assets you take

One common mistake that couples make is failing to consider the future costs (and financial burdens) of each asset. For example, many spouses want to keep the family home, but later regret it, as they are now limited to one income. Consider if you can truly afford the mortgage and maintenance of the house over the long-term.

In addition to the future costs, divorcing couples should not fail to consider thetax consequences for each asset. For example, two stock portfolios of equal value could actually be worth two different amounts, due to capital gains taxes.

Update your documents 

When getting a divorce, it is important to minimize any financial ties with your former spouse. In doing so, make sure that any jointly held bank accounts, credit cards are closed. Otherwise, if your former spouse goes bankrupt, commits fraud or defaults on a debt, you may be liable.

In addition, once your divorce is final, it is highly advisable for you to update your will to reflect your change in circumstances. Also, make sure that your former spouse’s name is off your house deed, car titles and life insurance. It is also a good idea to check your credit report to make sure that your former spouse has not incurred any debts in your name since the divorce.

Consult an experienced divorce attorney 

Because of the possible life-changing effects that divorce can have on a person’s life, it can be a significant undertaking. Like all important situations in life, proceeding without legal assistance is unwise. If you are considering divorce, contact a divorce lawyer who can discuss your situation with you and advise you of your options.