When a couple decides to get a divorce, it can be one of the most difficult decisions they ever make. Along with the emotional toll it takes, there is also a significant financial impact. In fact, divorce can have a negative effect on a person’s wealth that may last for many years.
Property Division
In most cases, property is divided evenly between the two spouses. In some cases, however, there may be a need for one spouse to receive a larger portion of the property in order to maintain their standard of living. This is often determined through a process known as equitable distribution.
During equitable distribution, a judge will consider a number of factors including each spouse’s income and assets, the length of the marriage, and whether one spouse contributed more to the marital estate. If you are considering divorce and have questions about how property will be divided, it is important to speak with an experienced family law attorney.
Child Support and Alimony
It’s no secret that a divorce can be costly. Between splitting assets and deciding who pays which bills, there are plenty of financial decisions to make. Two of the most common expenses in a divorce are child support and alimony.
Both child support and alimony can be difficult to calculate. In some cases, the parties involved may need to hire a lawyer to help them come to an agreement. There are several factors that go into calculating these payments, including income, custody arrangements, and other debts and expenses.
In most cases, child support is paid by the non-custodial parent to the custodial parent. The purpose of child support is to ensure that the children involved have the same standard of living they would have if their parents were still together. Alimony is typically paid by the higher-income spouse to the lower-income spouse.
Taxes
When a couple divorces, there are typically many changes that take place in their lives. One such change that can have a major impact on their tax liability is the filing status of each spouse.
If one spouse was considered married filing jointly before the divorce, they will likely be considered single after the divorce. This can mean a higher tax bill since they will now be taxed as individuals rather than as a married couple.
In some cases, the spouses may be able to file as head of household if they have qualifying children living with them. This can provide some relief from the increased taxes that come with being single. However, it is important to note that there are specific qualifications that must be met in order to qualify for this filing status.
Retirement
A divorce can disrupt your retirement plans. If you are married, you and your spouse likely have been working together to save for retirement. But when a marriage ends, those plans may go out the window.
Splitting assets can be difficult in a divorce, but it’s especially challenging when retirement savings are involved. In many cases, one spouse ends up with the bulk of the retirement savings, while the other is left with little to nothing.
That can create some serious financial problems down the road. You may have to work longer than you planned or dip into your retirement savings earlier than you wanted in order to make up for what you lost in the divorce.
So if you’re going through a divorce, be sure to factor in the potential impact on your retirement plans.
Closing Costs
Closing a divorce can be expensive. There are often many costs associated with closing a divorce, such as court fees, attorney fees, and costs for dividing property. These costs can add up quickly, so it is important to budget for them when finalizing a divorce.
Some people may be able to negotiate some of these costs with their ex-spouse. For example, if one spouse agrees to pay more alimony or child support, the other spouse may agree to pay less in attorney fees. However, most of the costs associated with closing a divorce are non-negotiable.
It is important to remember that these costs are just one part of the overall cost of getting divorced. There are also emotional costs to consider, which can be just as expensive as the financial costs.
Conclusion
In conclusion, divorce can be costly. If you are considering divorce, it is important to understand the financial implications. You may need to start over after divorce with little or no money. There are ways to protect yourself financially, but you need to take action before or during the divorce process. A qualified attorney can help you protect your interests.
