Financial Implications of Divorce
Divorce is an emotional topic, which is why many people going through it forget about the financial implications. Divorce changes everything; some aspects of your life shall improve, while the rest might take a turn for the worst. When two people are bound by a marital relationship, they unknowingly conquer many obstacles together. As the two spouses take on separate ways, they have to deal with all sorts of issues independently. Somerville NJ Bankruptcy Attorney states that divorce has played an active role in many cases of bankruptcy. Following a divorce, each spouse if left with half or less of what he/she previously owned and that instigates a major financial crisis.
Division of Assets
Whenever you are contemplating divorce, act smart by making a list of all your marital assets. All the material things you share with your spouse shall be cut into two halves; therefore, it is best to estimate your share and the overall monetary value in advance. Every property has different tax liabilities, thus equal division of possessions can be a tricky affair.
Remember the following items while you recall shared property:
- Other real estate/land/houses
- Mutual Bank accounts (current and savings)
- Retirement funds
- Stocks and Bonds
- Insurance policies
- Valuable collectibles
- Tax Refunds
- College Funds for Children
Debt and Liabilities
Apart from traditional assets, you must also take into account shared debt and liabilities. Joint loans, leases, and mortgages need to be managed along with associated taxes. If you both share credit cards, you both are equally responsible to make up for due payments. All secured and unsecured debts incurred during the marriage will keep you two connected after the divorce until paid off.
Child Support and Alimony
If you were the spouse with higher income in your relationship, child support and alimony are two more financial obligations to look forward to. Bear in mind that child support is not the same as alimony; alimony is a separate entity that is solely designed to support the lesser privileged spouse. Chances are that you won’t be able to exercise any control over the amount you pay for your child and ex-spouse every month. There are no taxes levied on child support, but the money that goes into alimony can be deducted from your income; on the contrary, the spouse receiving alimony is obliged to pay income tax on it.
The Cost of Divorce
Divorce is a tiresome process, while the fees of your divorce attorney and courtly proceedings are financially exhausting. The longer the list of your assets and the greater the number of conflicts with your spouse, the more time and money shall be spent to resolve the situation. It is up to you and your spouse if you are willing to end the marriage quickly on friendly terms (in the presence of your lawyers), or you prefer to drag the case to court and fight each other till eternity.
Change of Lifestyle
The single life can be challenging after getting out of a long-term marriage. Women are generally more susceptible to financial setbacks, especially those who were entirely dependent on their ex-husband’s income. Despite receiving child support and alimony, they still struggle to make ends meet. Child custody obligations and management of daily expenses singlehandedly are harder than expected. Men who earn 80% or more of the household’s total income are less likely to encounter a financial deficit post-divorce.