Divorce settles four main issues: division of marital assets, spousal support, child custody, and child support. A large part of divorce revolves around dividing the assets you and your spouse acquired during your marriage. All too often, spouses analyze their finances and start planning their financial future after the divorce is settled.
If you're considering filing for divorce, then it's wise to analyze your finances before your divorce. Consider these four compelling reasons why enlisting the help of a financial planner can be of major benefit.
Divorce can be a long, slow, and arduous process that often brings out a lot of painful emotions and strife. The early stages of a divorce typically involve gaining an understanding of your finances and the financial implications of your divorce. Analyzing your finances before divorce saves you time and helps the divorce process run more smoothly.
A financial planner can help analyze your finances and make recommendations on how to financially prepare before, during, and after your divorce. This will enable you to avoid common pitfalls, while also reducing the financial impact that comes with divorce.
For example, divorced spouses may be tempted to liquidate an individual retirement account (IRA) to help with expenses. However, doing so may have financial implications, such as a capital gains tax, which can really add up. This refers to a tax on the profits from the sale of a non-inventory asset you sold it for more than you originally spent.
Finances are complex, so it's best to have an analyst as part of your team to help you plan for divorce.
It's beneficial to have a financial planner provide you with a clear view of your financial future so that you understand your financial needs. That way, you can approach settlement negotiations with an informed understanding of the big financial picture.
The knowledge, guidance, and advice you receive regarding your finances can mean the difference between a fair settlement and getting shortchanged in the divorce. For instance, you may feel good about getting the family home and not realize that the other spouse took out a home equity loan - which could leave you with even more debt.
Analyzing the complex nature of your financial situation will help you avoid long-term financial pitfalls, save you money, and increase your chances of getting a fair settlement.
Post-divorce financial struggles are a real concern for most couples. Even when both spouses work, one spouse is commonly the higher earner. When couples divorce, they tend to need an increase in their income to avoid financial stress.
With the help of a financial analyst, you can come up with a practical budget to help reduce the financial impact that divorce has on your lifestyle. You will gain a solid understanding of your monthly expenses to take into consideration when negotiating your final settlement.
For instance, you may want to consider that certain expenses will go up after the divorce, such as health insurance and general living expenses. You may also want to consider the impact of paying off certain debts on your own following the settlement. Just like your assets, debt is divided as part of the divorce.
Build a Solid Financial Future
Many spouses head into divorce with fear and apprehension about what it will mean for their financial future. Through financial divorce analysis, you can gain confidence in your understanding of your finances, which will help ease the fears about what the future holds following the divorce.
Knowing your economic future can make the divorce process less stressful and encourage you to come to an amicable agreement. At Sanchez & Farrar PLLC, our team is dedicated to making you a top priority. Contact us today to schedule an appointment with a qualified divorce attorney.