When you think of divorce, you likely begin thinking of how much it’s going to cost. Seeing highly publicized divorces makes it clear that a divorce can quickly drain your bank account if not appropriately handled. It’s also important to note that it’s not just the high-value divorces that leave a lasting impact on finances. This is why it’s essential for any couple going through a divorce to understand the cost of divorce and what effect it will have on their financial situation moving forward.
As our economy continues to improve-- or at least anecdotal evidence states so-- it’s becoming more common for couples that would have stayed together due to financial necessity to split. Divorce is becoming more “manageable” for many that would have otherwise remained together for the many benefits of their joint bank accounts.
John Slowiaczek, vice president of the American Academy of Matrimonial Lawyers states,
“People have a greater sense of freedom. They gain more confidence that they could live an independent life.”
Although the economy is improving, there are still many financial risks involved with divorce. Whether you’re a stay-at-home parent, the one bringing home the dough, or married to your financial equal, the stakes of divorce remain high.
Mark Zandi, the chief economist at Moody’s Analytics, explains,
“Divorce generally results in a significant financial setback for all those involved.”
Due to this fact, it’s more important now than ever to plan for your divorce.
Be sure to Plan
Emotions run high during the divorce process, which can make negotiating with your significant other nearly impossible. This is why it’s so important to properly plan and prepare the financial aspects of your marriage for the split.
While it’s very common for one spouse to be in control of the family’s finances, it often makes divorce that much more challenging. When a marriage heads toward divorce, it is imperative that both members have a full understanding of where their financial situation stands. Many financial advisors state that it’s crucial to have a track record of your family’s assets and liabilities. This includes things like:
- Tax returns
- Retirement accounts
- Investment accounts
- Household bills
- Vehicle bills
- Medical bills
- Other important spending reports
In addition, you will need to create and document an inventory list of your valuable property, including:
- Shared real estate
Be sure that you make a complete list, as forgetting something valuable on the inventory list could mean not receiving your fair share when the time comes.
In addition to tracking your assets, you also need to be sure to keep track of any shared debt you and your spouse racked up together. This often includes joint loans and credit cards, and these will still need to be paid, regardless of if you’re still together or not.
That being said, the best thing you and your spouse can do to prepare for your divorce is to pay off all shared debt before finalizing the divorce.
With a home comes many payments. Not only is there a mortgage, but also the costs of monthly upkeep, utilities, and decor. Many trusted financial advisors believe the same thing when it comes to the house and your divorce; sell the house and split the proceeds in the divorce proceedings. Doing this will ensure that both partners share the risks and costs associated with selling the home.
Other Things to Consider
As you likely already know, housing is not the only expense in your life. Other expenses you will need to be able to handle on your own include:
- Health insurance
- Car payments
Lokken & Putnam Can Help
If you’re facing a divorce, working with an experienced divorce attorney can help. At Lokken & Putnam, we work closely with our clients in order to help them achieve the best possible outcome.
Call us today (801) 829-9783 to learn more about how we can help you get started with a plan to make your divorce as stress-free as possible over a free consultation.