Divorce is not only emotionally draining, but it also can be financially draining if you do not carefully plan your finances. With the current divorce rate in America sitting at 40 to 50 percent, divorce is a prevalent issue for many people. When going through a divorce, you can avoid financial turmoil by following a few simple planning tips.
Assess the Impact of Divorce on Your Financial Goals
Project future expenses that the divorce will create as well as any future expenses to which you will now contribute on your own to get an estimate of your financial future after divorce. These expenses may include the following:
- Household items that need replacing
- Mortgage or rent payments
- Child support and spousal support or alimony payments
- Expenses for children such as daycare, tuition and insurance
Evaluate Your Assets Before Negotiating a Settlement
It is also important to understand the impact of keeping certain assets and letting others go. Deciding to keep some assets, such as the house, will likely result in more expenses. Evaluating the cost of your decisions can help you check whether you are able to afford them before negotiating your final property settlement in your divorce.
Update Your Information on All of Your Financial Accounts
As soon as a divorce is sure to be in your future, revise the beneficiary designations on all of your financial accounts and consider updating your will. Removing the names of former owners from property deeds and car titles is another important step.
Cancelling your joint credit cards or removing your spouse’s name as an authorized user from all of your accounts can help protect your finances as well. In addition, removing your name from all of your spouse’s accounts should also be done so you are not held liable if your spouse defaults on his or her payments. Even though a divorce decree may declare that you are not liable for your spouse’s debts, credit-card companies and other creditors are not bound by the divorce decree.
Seek Expert Advice
Finally, consider seeking advice from a knowledgeable divorce attorney. A lawyer can help you make sure that all of the financial and legal bases are covered before negotiating your settlement and finalizing your divorce.