Money plays an important role in our lives. While a truism like "money can't buy happiness" is wise to a certain extent, it is a fact of life that financial insecurity can cause a great deal of stress. Money is also important to our future, which is why we set aside whatever we can spare to build a nest egg with the hopes of supporting ourselves through our sunset years.
Since money plays such a pivotal role in our lives, it's no surprise that money disputes are often at the center of contentious divorces. Those who are considering a divorce can benefit from having a basic understanding of how a divorce can impact their finances.
That is why each party to a divorce should ask themselves three basic questions about finances:
- What are my property concerns? In many cases, it is a good idea for each spouse to fill out a financial statement. This form includes a list of all property items and an estimated valuation. This can allow for any discrepancies to become apparent before heading to court. Discrepancies can result in delays, and delays can translate to a more costly divorce. The discussion about the results of these forms should also include determining what to do with the primary residence. It may be best to sell the home or refinance and get the other spouse off the mortgage. A spouse that remains on the mortgage puts his or her credit at risk. Even if one spouse is responsible for the payments, when both names are on the mortgage both individuals can take a hit if payments are missed or late. Keep this in mind during negotiations.
- Is litigation in my best interest? There are two basic types of divorce proceedings: traditional litigation or collaboration. The collaborative process involves legal representation for each spouse. The spouses and legal representation meet and negotiate the terms of the divorce. Property division determination, child custody, child support, every aspect of the divorce can be determined using this process. For spouses that are able to negotiate amicably, the process offers many benefits. It generally takes less time and the schedule is determined by the parties involved, not the court. Another benefit is the fact that the parties make the determinations, not a judge. However, collaborative divorce is not always appropriate. In some cases, litigation is the only way to protect your financial future. Sometimes, a more costly divorce now provides a large return in the future.
- What do I imagine my financial future to be? In the middle of a divorce, it is easy to lose sight of future financial concerns. A retirement account may not take as high of a priority as where you will live today, and whether your children will be living with you. Still, it is important to keep life after divorce in mind. One primary consideration is to make sure the final divorce settlement includes a fair split of retirement assets. Your divorce lawyer can help you understand what assets are most valuable to you depending on your financial goals.
These are just a few of the more common considerations to take into account when navigating through a divorce. Whether going through a contentious or amicable split, it is wise for those who are divorcing to contact an attorney to help better ensure their interests are protected.