Financial Decisions in Divorce

Even though couples split up every day in this country, many individuals still begin the process of divorce knowing very little about the financial realities involved. For sure,  most people don’t realize that their standard of living will likely decline—as much as from 10 to 30 percent according to some estimates. But there are some things you can do to make the future look a little brighter financially.

Making Decisions Based on Circumstances, not Emotions 

Maybe you don’t want to hurt your soon-to-be ex any more than you already have by announcing you want a divorce, so you plan to just walk away without any negotiations about assets and debts. Or perhaps, on the other end of the scale, you are so eager to get out of a wretched marriage that you’ll agree to anything just to escape. Either situation can be dangerous for your future. You’re just not weighing financial matters with the detachment and objectivity you need!

Should You Try to Hang on to the House? 

You may love your home and community, and really want to stay there.  But holding on to a house you really can’t afford on your own means you’ll have to give up other things. And for what? If you’ll struggle with the payments, maintenance, and time it requires, it will ultimately feel like an albatross.  And if you end up having to sell later, you will only be able to exclude capital gains tax exemptions at half the rate as you could have done while married.  Add to that being stuck paying the realtor’s fees by yourself instead of splitting them with your ex if you’d sold as part of the divorce, and it becomes clear that selling before the split would have been a big financial boon.

You’ll Want Some Cash 

You may feel pleased if you can walk away with the house, some furniture, a vehicle, and other hard assets. While these are all great to have, they don’t put food on the table, or pay the rent– and they’ll depreciate with time. And while retirement accounts are wonderful, you’ll pay penalties if you take an early withdrawal.  So what happens if you experience a sudden unexpected expense like having your car break down or suffering a serious health issue? Having some cash on hand is one way to avoid substantial stress down the road from divorce.  So consider giving up some hard assets for a bit of liquidity.

Now and Later Matter

Negotiations related to child and/or spousal support need to include discussions about future possibilities. Even in good-natured divorces, there’s always the prospect of support payments becoming an issue down the road.  Consider wage garnishments so your ex won’t be able to change their mind and try to evade payments down the road.  Additionally, consider new or existing life insurance policies: they need to provide the benefits required should your spouse die while you are still eligible to collect. Realistically, your expenses will continue long after the divorce with retirement needs, education expenses, and more.

Looking Out for You

At the WiseLieberman our experienced Boca Raton divorce attorneys will offer their guidance as you contemplate the many intricacies of divorce.  To discuss the particulars of your situation, schedule a confidential consultation in our Boca Raton office today.