17 Nov Surviving Divorce: The Economics
Giving up on a marriage is painful, regardless of whether it’s an amicable split or one marred by bitter custody battles. Even under the best of circumstances, nobody really wants to walk away from his/her spouse. And then there are the financial considerations–it costs more to run two households than one. There may also be child support or alimony payments.
There are two ways to survive divorce financially
1. Divide cash and assets in a manner that is truly fair. Fifty-fifty may seem to fair, but it often is not. One of the largest concerns is taxation. Going from joint returns to single returns can trigger an audit and leave both partners with heavy tax burdens. Try to avoid being sentimental about things. It is better, for example, to sell your home, split the money and buy two smaller houses than to have one person take it, especially if there are no children involved. Split all finances.
2. Make your post-divorce financial plan. If you have been a stay-at-home spouse, remember that getting back into the workforce can be difficult. Potential employers tend to be less than sympathetic towards women (and some men) who take career breaks to raise children. If you have suitable skills, you might consider starting your own business, but be aware that you may not be able to get the kind of work you could before you took time off. If your partner was the breadwinner, you will have to make compromises.
Identify a budget
If you are not the kind of person who keeps strict financial records, then estimate the amount and add at least 15% to it. Make a plan to regain that financial level. Assuming you are still on good terms with your spouse, don’t be embarrassed to accept help, voluntary or court ordered. If you are the one with the higher income, even if you have a custody arrangement that allows you to avoid paying child support, helping your ex out is a good way to keep things as amicable as possible.
Who will get the children vs who will get the house
When most people think about divorce, they think ‘what will happen with the children’. If financial matters come into their minds at all, they think ‘who will get the house’. However, divorce is a financially difficult situation as well. A good financial planner can help devise a settlement that will allow both partners to not just survive, but adjust and get on with their lives.
We help couples with Uncontested Divorce. We also recommend excellent financial for our clients to help them deal with their new family reality. Stop in to one of our Bay Area offices to get started on your Divorce.