What You Need to Know Financially if You’re Facing a Divorce
Divorcing your partner can be a very painful emotional experience; and the financial devastation can be as equally painful. You may be used to a standard of living and with the divorce, your income is cut in half and you end up shouldering all of the household expenses instead of splitting them.
It’s hard enough to divide up joint purchases without having to worry about how the money you do make will be affected – and if you weren’t working, how you will now survive and obtain an income. There are laws set in place to protect both parties in the middle of a divorce and it’s good to know that they are there – so that you can ensure a quality life after the person you once loved has left your life.
Here are some financial points you need to know when facing a divorce:
- Establish Credit and Accounts In Your Name. If you haven’t already done so, now is the time to establish credit cards and bank accounts in your name alone. In the middle of a bitter battle, emotions can sometimes result in negative actions, such as your former half pulling all money from your joint accounts. Opening your own accounts and pulling out only what’s yours can help you protect your finances.
- Understand Child Support Rights. If you are deemed the primary guardian of your children, then you may need help paying for what two parents used to pay for in child care. Often, parents are able to manage finances for children just as easily as they could together. However, in some instances, one parent is forced to handle this financial obligation alone. In order to protect your divided income, you can file for child support. This will require the second parent to pay a sum each month to help support the child. If you don’t think you’ll get help from your ex-spouse, it’s good to learn the child support rights of your state. Child support is not taxed as income.
- Understand Your Legal Entitlements. If you or your spouse decided not to work because of child care or otherwise, then alimony will come into play. The working person will now owe the unemployed partner alimony. Of course, there are tons of laws to consider (including whether the partner signed a pre-nuptial agreement).
- Keep Your Emotions (and Legal Wranglings) in Check. You may be a bit tempted to get back at your partner by coming up with more to fight over in court; however, this can hurt emotions and finances. The longer you stay in court fighting, the more you’re sure to spend in legal fees.
- Work with Your Partner to Divide Assets. A way that both partners can properly protect assets is to sit down and work together. This way, you can spend less time having your lawyers negotiate these items for you. But even more, you can keep the peace between you two, which is needed to make the split as smooth as possible.
- If You Plan to Keep the Family Home … come up with a realistic housing budget that will help you manage the greater expenses. As a guideline, your housing expenses should make up only 35% of your income.
- Increase Your Insurance Coverages. Since you will no longer have a second income to fall back on (and the additional support for your children may not be as reliable) it’s good to increase both your life and disability insurance coverages. If you don’t have either, now is the time to get them! Check Go Insurance Rates for life insurance quotes.
- Be Prepared to Claim Social Security. If you are 62 or older and were married for at least 10 years then you are eligible for Social Security benefits based on your ex-spouse’s earnings. However, this is only the case if no one has remarried.
When a divorce, emotions can run high enough without throwing financial grievances into the mix. So as you’re going through the process, it’s good to communicate with your ex-partner to create as much peace and positive emotion as possible. Not only will this help to protect finances, but most importantly, it will create a more amicable split.