Life After Divorce: Set Yourself Up for Success
Divorce settlements don't always do the justice they're supposed to when people fail to properly and thoroughly look over their finances. There are a few common areas that people don't always take into consideration when going through a divorce that can hurt them in the long run—making it all the more important to work with a qualified divorce attorney.
If you are ready to file for divorce, we encourage you to discuss your options with a lawyer at Moore, Schulman & Moore, APC. We have more than 200+ years of family law experience! Call (858) 492-7968.
Identifying All Finances
It is essential to make copies of all financial records. From account statements to any documents relating to your marriage, such as tax returns, you need copies. You also need to identify every single expense you have each month. Write them all down and come up with an accurate monthly budget. Future expenses should be written down as well.
The current market value of an asset does not always show a true reflection of its worth. Anything that brings in income could be worth more than its market value. Compare all levels of assets and think about tax basis, present value, and transaction costs. You should also look at all finances when dividing assets rather than narrowing in on one at a time.
They often correlate with one another through taxes, capital gains, investment losses, inflation, and more. One financial decision could greatly affect another. Hiring a financial planner to look over a proposed divorce settlement could be beneficial to validate that the financial decisions you make now won't cause problems for you in the future.
Fighting for the Family Home
Moving out of the family home can be a stressful and undesirable process. However, it may not be in your favor to stay – financially speaking. Take into consideration the mortgage, property taxes, and maintenance to decide if you can truly afford it. If you're sacrificing other finances to keep the house, you may be putting yourself in a harmful situation. It's always important to try to separate your emotional attachment to objects when dividing assets.
Keeping Secure with Insurance
If you are receiving alimony or child support payments as a result of your divorce, you will want to make sure your insurance is up to date. You can request for your spouse to get disability and life insurance policies to make sure the payments won't stop in the event of your spouse's death or disability. It's also important to update any beneficiaries named on life insurance policies, IRAs, and wills so that inheritance matters are left to the new desired person or group.
Paying Off Debts
Any credit card debts shared by you and your spouse will still exist after your divorce. In most cases, if the debt was built during the marriage, then it doesn't matter whose name was on the card; you will both be held responsible for repaying the debt. Regardless of what the settlement says, the credit card company will still come after both of you when seeking repayment for the debt. For this reason, it's best to get all debts paid off before the divorce is final.
Evaluating a Defined Benefit Plan (DBP)
A Defined Benefit Plan (DBP) pays a monthly income after retirement that is funded and controlled by the employer. It still has value before retirement, in which the spouse who is not employed can get access to. A Defined Benefit Plan can have its current value calculated, and the non-employee spouse can get his or her share of it.
Getting a QDRO in Place
A Qualified Domestic Relations Order is a legal document showing how two spouses have chosen to divide a pension plan or defined contribution plan. Whoever is administrating the plan is ordered to pay the non-employee spouse his or her agreed upon share. It's important to get the QDRO during the divorce so you don't lose pension rights in the future.
If you have questions about the financial aspects of your divorce, please do not hesitate to discuss your case with an attorney at Moore, Schulman & Moore, APC. You can reach us at (858) 492-7968.