Financial implications of a divorce are among the most important factors to consider. While where the children will live and who will have to pay how much in child support or alimony are important to consider, money issues can live on and cause problems in the future.
While divorce in Birmingham can be an emotional process, Birmingham Divorce Lawyers aim to take the emotion out of it, if possible. Keeping clients apprised of everything that is happening in the case and protecting clients from the problems arising out of bitter, contested divorces are important.
While child custody issues are often some of the most contentious issues that play out in divorces, how assets are divided, how the debts are split up and how to protect from divorce taxes that can have long-lasting negative effects may be equally important.
The Huffington Post recently provided some tips to avoid financial struggles after a divorce:
Do your homework: It’s critical to assess how your divorce will impact both your short and long-term financial goals. Take time to account for any household items that you’ll need to replace and evaluate how this will affect your immediate cash flow. Understand your total net worth (assets and liabilities), and other significant financial obligations including mortgage or rent payments, retirement plan contributions, child support and alimony payments. If you have young children, project future expenses including car insurance, tuition and other large purchases which often accompany the teenage years, as well as more immediate needs such as daycare.
Understand your assets: Not all assets are created equal. Instead of allowing emotions to drive your decisions, carefully evaluate the financial benefits and consequences of different assets before you negotiate your settlement. It’s tempting to ask for the house, but your residence, while valuable, is an asset that requires mortgage payments and a considerable amount of upkeep. Instead, consider requesting a portion of your spouse’s retirement plan – a tax-deferred and potentially appreciating asset.
Update your financial accounts: Immediately revise the beneficiaries on your checking and savings accounts, investments, retirement plans and life insurance policies and update your will. Update all property deeds and car titles – the names of former owners are not automatically removed following a divorce. You may also want to cancel credit cards or ensure your spouse is no longer an authorized user on your accounts. Also confirm that you have been removed as a co-owner on your former spouse’s accounts so you aren’t held liable if they fail to meet an obligation.
Review your insurance coverage: Your insurance needs may change once you’re single. Evaluate your life, health, disability, auto and property insurance policies and confirm that you have adequate coverage for yourself and any dependants. Ask the court to require your former spouse to maintain life and disability insurance to protect any child support or alimony that is owed to you, in the event that they die prematurely or are no longer able to work.
Seek expert financial advice: Your attorney will play an essential role in your divorce proceedings, but don’t assume your lawyer is a financial expert. Consider working with a financial advisor who can help you with all aspects of your financial life before and after your divorce is finalized. This may include determining fair separation of assets, evaluating cash flow and liabilities, recommending budgets, examining your protection needs and identifying favorable tax strategies.
Facing a divorce? Protect your finances, by Suzanna de Baca, The Huffington Post