Play it Smart Financially in Divorce
Despite the fact that people split up across the country every day, many still enter the process knowing very little about the financial realities of a divorce. Certainly, most individuals don’t realize that their standard of living will likely take a huge tumble—from 10 to 30 percent according to some estimates. That being the case, there are some steps one can make the future look a little brighter financially.
Control Emotions When Making Decisions
You may be experiencing some pity for your soon-to-be ex, who is destroyed about losing you. Or, on the other end of the continuum, maybe you are so eager to get out of a wretched marriage that you’ll agree to anything just to escape. In either case, things don’t bode well for you if you’re not weighing financial matters with the detachment and objectivity you need!
Get Rid of a House You Can’t Afford
If you love your home and community, it may be difficult to sell the house. But hanging on to a house you really can’t afford means you’ll have to sacrifice lots of other things. And for what? If you can’t handle the maintenance, cost, and time., it will ultimately feel like a millstone around your neck. Unfortunately, if you wind up having to sell later as a single owner you will only be able to exclude capital gains tax exemptions at half the rate as you could have done while married, and you’ll be caught paying the realtor’s fees by yourself. Selling before the split would be a big financial benefit in these situations.
Remember to Put Aside a Liquid Nest Egg
Imagine walking away with the house, furniture, a vehicle, and other hard assets. While that’s a nice haul, they don’t pay the rent or put food on the table, and you’ll have to deal with depreciation over time. What happens if you experience sudden unexpected expenses like a health problem or a water heater that goes out? Having some cash on hand is one way to avoid substantial stress down the road from divorce. While retirement accounts are great, you’ll be paying hefty penalties for early withdrawals.
Prepare for Now and for Later
You may undergo general negotiations related to child and/or spousal support, and you’ll want to think about future possibilities during these talks. Even in amicable divorces, there’s always the prospect of support payments becoming an issue down the road. Wage garnishments should be considered so that your ex won’t be able to change their mind and try to wiggle out of payments later. Also, think about new or existing life insurance policies: they need to provide the benefits required should your spouse die while you are still eligible to collect. Remember that your expenses will endure long past the divorce with retirement needs, education expenses, and more.
We’re Looking Out for You
At Courtney & Mills our experienced Springfield family attorneys will offer their guidance as you contemplate the many intricacies of divorce. To discuss the particulars of your situation, schedule a confidential consultation in our office today.
