If you’re in the process of getting divorced, you probably have a dozen different issues on your mind, ranging from where you’ll live to what will happen to your children. So while financial concerns likely register somewhere on your list, they may not be at the top.
Well, it’s time to boost those questions up a few points because money matters in a divorce – maybe more than you think. And, whether you have a lot of money or you’re just scraping by, your lawyer and the courts are going to have a lot of questions about your finances.
What types of questions should you be prepared to face or to ask yourself when getting divorced? Though there are many possibilities, these questions are among the most important to consider.
How Much Will This Cost?
Never mind the nitty-gritty; to get started, you’ll just want to get a sense of how much it will cost you to get divorced in the first place. Your lawyer should be able to give you a ballpark figure for how much it will cost to do the administrative work for your divorce.
This will vary depending on the area you live in and the complexity of your case, but your lawyer likely handles a lot of divorces. They know what they need to do and how to get you the results you want.
How Will Debt Be Handled?
One of the biggest financial issues you’ll face during a divorce is the division of debts and assets, and how this is done will depend on state law, whether you have a prenuptial agreement, and other factors like when the particular debt or asset was acquired. Ideally, your lawyer will help you protect those assets that are yours while minimizing the amount of debt you have to take on from your spouse.
Unfortunately, any shared debts and marital assets are likely to be split evenly, even if you don’t have equal financial resources post-divorce. When determining how both debts and assets are handled, remember that there’s always room for negotiation. If you and your partner are going through a fairly amicable divorce, you might consider entering mediation and working together to reach a fair and reasonable division of debts and assets.
In more contentious cases, however, your lawyer may be able to make a strong case for an uneven division based on how much money you contributed during the relationship or your relative ability to pay off debts and still pay your bills if your partner has greater earning power.
It’s important that you are clear about who retains what debts and if you have the ability to pay because, whatever the court’s decision, remember that the creditors don’t care. You need to know what debt is in your name specifically and ensure that those debts are being paid or suffer the financial consequences.
Who Will Cover The Children’s Expenses?
Do you have kids? If so, one of the most important financial issues at stake is who will pay for their expenses – and that includes everything from clothes and groceries to school fees and medical insurance. Whether anyone pays child support and how much, though, will depend on a number of factors.
According to Indiana bankruptcy attorney Rowdy Williams, “Courts will consider factors including each parent’s income, what typical expenses for your child look like, and your custody agreement when determining payments. If you have 50/50 physical custody and fairly equal earning power, neither parent may pay child support.
In other cases, however, you may be required to make substantial payments to make sure your child maintains a similar lifestyle to the one they had pre-divorce.” Everyone makes concessions and compromises during a divorce, but the court and your lawyer will both aim to minimize the impact on the kids.
What Will Happen To The House?
Do you jointly own a home? This is a common issue for divorcing couples, and because it’s likely neither of you will be able to afford to purchase a home on a single income, some people try to find a way to retain the property in the settlement
It’s a reasonable goal, but it’s often not a financially manageable one. If you do keep the house rather than selling it, you may find you have to give up child support payments or other financial benefits because of property equity – even if you take on debt in the form of your mortgage.
What Are The Tax Ramifications?
Taxes are complicated all on their own, but add divorce into your tax situation, and things get even more involved. Among the issues you’ll need to decide in advance include who will take the tax deduction for dependents, as you can’t file for it twice, what legal fees are tax deductible, and how to properly structure your child support to ensure these payments are tax deductible.
Additionally, while you may reach one set of agreements about tax outcomes right now, tax law changes all the time. As such, you’ll want to regularly consult with a tax lawyer to ensure you aren’t making any accidental errors on your filings.
What Are Your Priorities?
This may not seem like an explicitly financial question on its face, but there’s a lot hidden in this question that can have financial consequences. Specifically, by asking this question, you’re asking yourself what you might be willing to compromise on – including financial benefits you might be willing to give up – in order to get what you really want, such as a preferable child custody arrangement.
Money will undoubtedly be an important issue in the course of your divorce, but it’s not the only or even primary issue for many people. Be clear on what your priorities are.
Every couple encounters their own unique financial concerns in the course of divorce, and unpredictable concerns can always arise.
With support from a smart lawyer, as well as a clear sense of your current and future financial needs, you can fight for an outcome that still offers you the life you want and the support you need.