Unfortunately, divorce is relatively common in the United States, affecting millions of people every year. Divorce can have a major impact on the lives of all people involved, and this can be felt in many ways. One such example is how it affects financial planning, causing major complications when it comes to a variety of money considerations. Here’s a look at three ways that financial planning can evolve after a divorce.
Splitting Property
Most married couples own property together, and it is obviously very difficult for a divorced couple to continue living together after a divorce. As a result, many are forced to split or sell their property. In determining who gets what property, the judge will consider a few key factors. These include if anyone had previous ownership of the property before the marriage, any child custody arrangements, work location and more.
Debt
Most married couples incur some sort of debt together, usually for a major payment, like a house or a car. Many couples even incur debt for a wedding. Debt will remain after a marriage dissolves, so it will be up to you, your soon-to-be-ex and the attorneys to determine debt-repayment arrangements. Often, debt becomes another negotiation point in the dissolution of a marriage. Other times, it becomes more dependent on income. Whatever the ultimate scenario for you, keep in mind that you will have to deal with debt if your marriage is ending.
Saving for College
Children obviously complicate matters further when it comes to financial planning and divorce. One of the considerations that must be determined is how 529 accounts and other college savings vehicles will be funded. Sometimes, parents are able to reach a more casual split, setting broad financial goals for their kids and working together to meet them. However, more often than not, payment amounts become part of a divorce decree. Again, be aware: Putting dollars away for your child’s savings accounts will be something that must be dealt with during a divorce arrangement.
In some cases, divorce may be unavoidable. However, if a divorcing couple is able to still have reasonable negotiations, you can come to an amicable financial agreement that leaves both couples feeling like they are having their financial needs addressed. This can become more complicated if there are kids, but the stakes grow even higher if this is the case, as you also have to keep your children’s needs in mind.
If you need help with financial planning after a divorce, contact us to see how we can help!
