When you’re getting a divorce, it can be difficult to think about what comes afterward. Among the changes you’ll experience in your life is a new financial situation. To prepare for that, it’s important to start taking steps during the divorce process to protect your financial future. Choices you make now can have a significant impact on your finances later so you want to ensure you have the information you need to make good decisions.
Educate Yourself on Your Finances
If you weren’t involved in handling the family finances, you may not know much about your income, assets, expenses, and debts. Review the details and make sure you understand what you see. This is the time to learn because this information will be used to calculate alimony and child support and divide marital property. You’ll also need to start managing your own finances during the divorce. Consider financial literacy classes or books to give you a general understanding. You can also talk with a financial planner and/or tax professional.
Benefits of Working with a Financial Advisor and Tax Professional
Experienced financial and tax professionals can walk you through your finances so you understand what you have and can afford. They can also advise you regarding how to divide your marital property. Depending on your age, earning capacity, types of assets you own, and other factors, some assets may be better than others to try to negotiate in a settlement. For example, a $500,000 house has maintenance costs, while $500,000 in cash doesn’t. There may also be varying tax consequences for different assets. Investment and retirement accounts may be taxed differently making them more or less valuable over the long term.
Your advisors can work with your attorney to determine what assets would be most beneficial for you to have. This is particularly true when it comes to the family home. Often, a spouse wants to keep the home especially if there are minor children. However, it’s important to look at the costs of maintaining the home and what other assets will be given up in exchange for the house. Selling the home may be better financially.
Finally, advisors can help prepare you for life after divorce. That includes creating a budget and retirement plan based on the support and asset allocation awarded in the divorce.
Your divorce will impact your finances so it’s essential to make well-informed decisions to protect yourself. If you don’t have advisors, ask your attorney for recommendations.
If you’re considering divorce, contact us for a consultation. We have extensive experience with negotiating and litigating complex financial issues to obtain a favorable result for clients.
