Financial considerations in divorce

Finances impacted by divorce

To be frank, divorce proceedings are tough, but you can get through them successfully. Familiarize yourself with the following items that could impact your emotional and financial well-being, especially if the divorce isn’t amicable.

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• Alimony. This term means spousal support, and it may appear in a few different iterations. Most often, the spouse who earns more money pays alimony to their lesser-earning partner in order to help them become financially self-sufficient and adjust to life without the larger income.
• Property and debt division. If you and your partner have a mortgage, paying off a vehicle, or share any debt, it’s important to manage this financial split. It’s possible for two people to settle this without a judge getting involved, but it can also be easy for one party to feel slighted.
• Child support and custody. In some instances, parents can settle amicably on shared custody, with the parent who makes more agreeing to pay their share of child support. In other cases, this may lead to a lengthy court battle where one parent feels slighted in terms of how much time they’re legally granted with their child as opposed to how much they’re ordered to pay.
• Lawyer fees. Lawyer fees can put a dent in your bank account. Depending how drawn-out your divorce is, and how much work needs to be done, these fees can really add up. While no state requires you to hire a lawyer for your divorce, they can help protect your rights and help you untangle your finances. What’s more is that each spouse will need to have their own lawyer, which adds to the cost.
• Court fees. For some couples, divorce can be resolved without going to court. But every time you and your lawyer step into a courtroom, a charge is incurred. These fees add up during lengthy proceedings.
• Mediation. For couples who are amicable and willing to compromise, a mediator might be a better option than a lawyer to help you finalize things. Mediation isn’t free, however, so even if you and your spouse are on good terms, investigate costs before pulling the trigger.

How should you prepare for divorce?

Once you’ve decided to go ahead with your separation, you’ll need to gather a fair amount of personal and financial information for both you and your spouse. This will paint a clear picture of your shared finances, assets, and debts, as well as to determine any fees that must be paid like alimony or child support. These documents and information include:

• Tax returns
• Retirement plans
• Security deposit boxes
• Income information
• Credit reports
• Deeds and titles
• Any other assets or debts

One way to keep these documents organized and easily accessible is to upload them to OneDrive so that you can access them from any device at any time. Even if original documents become compromised, everything you’ve saved to OneDrive will be safe in your personal cloud storage.

How to manage your finances after divorce

Once the legal dust settles and your divorce completes, you may need to organize your finances differently—especially if your life has been connected to someone else for a long time. One good idea is to hire a financial advisor to get you back on track. If you prefer to manage your post-divorce finances yourself, it’s a good idea to brush up on budget basics to help get a handle on your new financial situation. Use a budget template to track your income and expenses.

Some other things to consider during this time include:

• Opening a new bank account just for yourself
• Setting up insurance in your name only
• Itemizing your personal belongings
• Acquiring new housing

All of these can take time and may feel particularly difficult, especially if your divorce proceedings went on for a long time. Reach out to family and friends for help if you need it. No matter how smooth or amicable your divorce is, you’ll likely feel some amount of personal upheaval. Make sure your finances are in order so you can set your future up for success.