Logan Voss
Divorce is an emotional process and a significant financial event. You’ll no longer share expenses and assets with your partner, and there are potential economic implications of the divorce. By understanding your financial situation, you can better prepare for the financial impact of divorce. Delve into the financial considerations below to make before getting divorced.
Assess Your Current Financial Situation
Before filing for divorce, take stock of your current financial situation. This includes understanding joint and individual assets, liabilities, income, and expenses. You should also review your credit reports to identify any joint debts or liabilities you’ll have to address in court.
For instance, understanding the division of marital debt can help youhave a clear idea of your financial obligations after the divorce. Often, debts acquired during the marriage, such as buying a home together, are marital debts. Alternatively, if your partner got themself into debt behind your back, it’s usually their sole responsibility to repay it.
Pro Tip
Consulting with a financial advisor can also provide insight into future financial planning and stability.
Create Separate Bank Accounts
After the divorce, you and your ex-spouse will have separate financial lives. You should have separate savings, checking, and credit card accounts to avoid confusion and potential financial disputes. You may also need to update the beneficiaries for life insurance policies and retirement accounts if your spouse is on your accounts.
Budget for Legal and Living Expenses
Divorce can be expensive, with legal fees, court costs, and other associated expenses quickly adding up. Budget these costs in advance by researching average legal fees in your area. Moreover, consider whether mediation or collaborative divorce could reduce costs.
Besides legal costs, consider the potential changes in your living expenses post-divorce. You may need to plan for new housing, utilities, and other day-to-day expenses if you move from a shared household to an individual one. A detailed budget will help you prepare for these changes and avoid financial surprises.
Note Financial Support Options
The final financial consideration to make before getting divorced is whether you’ll need to provide or receive financial support. Sometimes, courts order one spouse to pay alimony to the other if the couple shared finances and one earns significantly more money than the other.
Child support is another crucial factor to consider if you have children together. Whether you pay or receive these forms of support often depends on income, earning potential, and other factors that may vary based on state laws.
If you’re unsure whether you’ll be eligible for financial support or may need to pay it, consult with a lawyer to understand your rights and obligations. Understanding these options beforehand can help you negotiate a fair settlement during the divorce process.
