It’s a fact: divorce can be expensive and the financial repercussions can last for years.
Money is one of the primary issues that spouses argue about when a marriage is ending, and ironically, arguing about money is also one of the main reasons couples divorce. This post contains some financial considerations to take into account if you are planning on divorcing your spouse or are currently going through divorce.
7 Important Financial Considerations During Divorce
1. Your Household Income Will Automatically Be Halved
This seems obvious, but it’s important to keep it in the forefront of your mind when planning the divorce and planning for your future. This is especially important for stay-at-home parents who may be left with no income at all.
2. Know Your Credit Score and Improve It
Pull a credit report to see your credit score and any blemishes on your credit history. A low credit score or dings on your report can hinder your ability to borrow money or open a new credit card, something that may be necessary in the aftermath of a divorce. If your credit score is low, start working on raising it by making payments on time and taking care of debts that are in collections.
3. Set up Your Own Bank Account
If you have joint bank accounts with your spouse, set up an account in your own name. If your paycheck is deposited into the joint account, change it to be deposited in your personal account. Do not start transferring money from the joint account to your own account unless it is money you have made! A judge will not look favorably on that.
4. Joint Debts Are Still Valid
Your divorce decree does not terminate financial obligations to your creditors. If you have a joint mortgage, car loan, or credit card, both of you are still responsible for paying. Similarly, if one of you have cosigned student loans for the other, you are still responsible if they default on their loans.
5. Splitting Real Estate and Associated Costs
If you’ve decided to sell your house or any other properties you own together, you should discuss who will pay the fees associated with selling, who will pay the mortgage(s) until it is sold, and who gets the profits from the sale(s).
6. Your Taxes Will Change
Taxes are complicated enough when you’re married but in the midst of a divorce, they’re even more complex. If you’re separated but not yet legally divorced at the end of the tax year, you are still married in the eyes of the IRS and will file jointly. Learn more about filing taxes while separated.
If you have children, you will need to discuss who claims the kids on their tax return. A child can only be claimed by one parent, typically the parent with majority custody. If you have a 50/50 custody agreement, you will need to come to an agreement with your former spouse about claiming your child(ren).
Before the divorce is finalized, make sure that all previous tax debts are paid. When the divorce is finalized, each of you should have copies of your joint tax returns going back at least 5 years.
7. You’ll Need to Update Your Insurance
When it comes to health insurance, typically one spouse is the policyholder. If this is the case in your relationship, you’ll need to have your spouse removed from the policy (if you’re the policyholder) or vice versa. If you have a family, you will need to decide if your children will stay on your policy or move to your spouse’s new policy, if they get one.
Make Sure Your Finances Are In Order With an Experienced Divorce Attorney
If you need help navigating finances your divorce, the team at The Doyle Law Group is here to help. We’ve guided couples through divorce for over 14 years and can help ensure you have the representation you deserve. To schedule your consultation, call us at (919) 301-8843 or fill out our online contact form below.
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