Divorce. Yep, I said it. The “D” word. The sad reality is thousands of people file for divorce every year. Let’s be honest. Divorce isn’t easy. In many cases, the reason for divorce is related to money troubles. 24% of people divorce due to financial priorities or spending patterns. And finances are the leading cause of stress in a relationship. To make matters worse, getting a divorce can be the catalyst for bad financial decisions. Divorce is emotional and impactful, not just for the two married individuals, but also for children, family, friends and employers. Making financial decisions when emotions are on edge can be catastrophic. Many times, in an effort to get it over with, bad decisions are made without any thought to the consequences. If you are dealing with this issue, what are some important steps you can take to move forward with confidence and financial peace of mind?
Start by taking it one step at a time. Seeking legal counsel through an attorney or mediator licensed in your state or province is important. They will guide you through the legal process in a manner that is specific to the jurisdiction in which you live. A financial adviser is also vital as you work on getting a handle on expenses, debt and the division of assets. You will need to consider how life will look for you once the divorce is over.
Here are some questions to think about as you start to plan ahead:
- How are your financial assets organized? Do you know where documents are and how to read them?
- Do you have separate or joint accounts?
- If you have separate accounts, how are the bills paid? Do you divide them up or put them all together and pay half?
- Have you and your partner compared credit reports to determine how debt will be distributed?
- If there is a family home, will someone remain in the home? If so, do they have the income to support the maintenance of the home?
- If there are children involved, outside of child support, how will items such as extracurricular activities, health insurance, college, and miscellaneous expenses be handled?
- Is there life insurance and disability insurance coverage to protect alimony and child support payments?
- How will withholdings from your paychecks need to be adjusted to accommodate a change in your income tax status?
A divorce can suddenly thrust you into a state of emotional chaos but, you must not delay in getting clear about what needs to happen financially. The sooner you address this issue, the more at ease you will be about that part of the process. Working with a financial professional as you are moving through this can be very beneficial to make sure everything is working for everyone involved. Find an adviser who will partner with you, and will work with your other advisers, including mediators, attorneys, and accountants to make this as seamless a process as possible.