Divorce can be a challenging process. It can be especially challenging emotionally and financially.
Because of the possible financial impact of divorce, it can be helpful to keep some tips in mind to help avoid financial mistakes commonly made during the divorce process. In general, there are a number of important issues that must be resolved during the divorce process, including property division, spousal support, child support and child custody and it is important to carefully consider each and the emotional and financial impacts of resolving these important issues.
Collaborative divorce is one family law option that may help minimize the financial impact of divorce. In a nutshell, the collaborative divorce process focuses on an open process and achieving shared resolutions using the guidance of a number of experts and specialists concerning financial and other matters. Both parties must be committed to a fair resolution and an open process.
In addition to being open and honest, it is also important to be realistic about financial expectations following the divorce as one household is essentially split into two households. Budgeting and being informed about the reality of the couple’s finances will help. Developing a financial plan for the future following divorce is also essential to moving forward with a successful financial future.
It is also necessary to understand the tax implications of divorce-related settlements. Tax treatment may vary, for example, depending on how spousal support payments are made so it is important to be knowledgeable concerning the different tax treatment different settlement options may receive. Couples should also keep in mind that there a number of ways retirement can be impacted during the divorce process. With so many important considerations to decide upon, divorce can be overwhelming emotionally and financially, however, couples should keep in mind that options such as collaborative divorce can help minimize the time and cost spent on a divorce.
Source: NJ.com, “Financial mistakes to avoid in divorce,” Kurt Rossi, March 13, 2016