Many marriages ultimately end in divorce, although couples may not envision that outcome when they get married. Sound financial planning during the divorce process can help ease the impact of the divorce on the couple as they move forward towards their futures following the end of the marriage. Understanding what steps to take to plan financially for a divorce can be helpful for divorcing couples.
To begin with, it is important to have the right information and understand how to navigate the divorce process if that means litigation, settlement through negotiations, mediation or collaborative law. It is helpful to keep in mind that the more the couple is able to work together, the more time, money and acrimony they may be able to save. Next, it is important to compile a complete list of assets and liabilities. It is also essential to understand the tax implications of the divorce and property division. Gathering documents related to assets and liabilities, income and expenses, investment, retirement accounts and real estate documents is also an important step.
It is also important to adjust to the new realities of the circumstances of the couple following divorce and budget for a new lifestyle. Long-term planning is also important, as it can be useful to protect child support and spousal support obligations with life insurance. In addition, beneficiaries on insurance plans, retirement plans or in estate planning documents should also be updated following any major life change such as divorce.
Despite understandable emotions and a variety of concerns that arise during divorce, it is important to maintain a financial focus during the process and for the future. Doing so can help the divorce process proceed more smoothly and positively.
Source: Forbes, "How To Succeed Financially During And After A Divorce," Mark Avallone, Jan. 27, 2017