In additional to the emotional stress created by divorce, the separation process can also cause financial burdens to both parties involved. It is important to consider the aspects below in order to understand financial ramifications of the separation.
- Protect Your Credit Score. Until the divorce is finalized it is important to keep up to date on payments for all shared debts and expenses (ie. Credit cards, water bill, mortgage). Missing payments wills hurt both parties credit scores which may prevent you from securing additional credit at your separate households.
- Take Inventory of Shared Assets. It is advisable to collect about five years’ worth of financial data when determining your assets during a divorce. Important documents to have include tax returns, and statements from retirement savings or shared investments. Knowing what’s on the table will ensure that you are receiving your equitable share. Keep in mind where you reside as that can also effect how your assets are divided. Community property laws are followed by nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), and guarantee an equal split of all marital property from real estate to retirement assets. Every other state (besides Alaska) require equitable distribution, meaning a fair, but not necessarily equal, division of assets.
- Understand How Retirement Plans Will Be Impacted. The court may provide you with a Qualified Domestic Relations Order (QDRO) that will determine how retirement savings are divided. An example of how a QDRO can affect your finances is as follows: If your spouse has a pension, the way he or she elects to take it — and the QDRO — could impact you down the road. A standard election means you’ll stop receiving a share when your ex dies; with a QDRO, you might be able to get a survivor’s pension, typically half of the benefits your ex-spouse received.
- Update Your Beneficiaries. When setting up life insurance and retirement accounts, many people choose to elect their spouses as beneficiaries. After a divorce, you will likely wish to change your beneficiary designation or your ex-spouse will still be entitled to these benefits.
Divorce is never an easy process, but preparing for the financial impact can help ease the burden.
- Author
- Recent Posts
John Schutz
Partner at John F. Schutz, P.L.
Representing clients exclusively in family law cases for the past 24 years, Mr. Schutz is widely regarded as a marital and family law expert. He is Board Certified in marital and family law by The Florida Bar. As a Fellow of the American Academy of Matrimonial Lawyers (AAML), Mr. Schutz is committed to elevating the standards and improving the practice of family law.
Latest posts by John Schutz (see all)
- Is a Simplified Dissolution of Marriage a Viable Option? - October 29, 2019
- What are the Types of Alimony in Florida? - October 19, 2019
- Property Division In Florida - October 8, 2019
Investing In Your Financial Protection Before Divorce
For those contemplating divorce, the motivations for the decision and[...]
Does Cheating Affect Child Support?
Being cheated on by a spouse can be devastating, especially[...]
Plan Family Vacations As Co-Parents
You and your ex-spouse are on rather good terms. You[...]