When the happy ending doesn’t happen:  Divorce and Finances

Let’s face it, more than 50% of married couples will end up in a divorce.

Our lives have changed so much in the last decades.   We live longer, stress increases every day, relationships are difficult, our views of life evolve and not always in the same way as our partners’.  Kids grow up and leave the family home, and sometimes we find we don’t know the person we are married to anymore.

Divorces are painful.  Not only those where one party suffers at the expense of the other, but also the amicable ones.  Changes are difficult, and we don’t want to accept them sometimes.  But deep inside we know change is for the best.

There is a very important economic aspect of divorce.  There are more women in the work force which means more women could cover their needs without the help of a non-loving husband.  Financial freedom gives women the tools to decide what is best for them, faster and sooner.

What to do when a divorce happens:

If you do not have a prenuptial agreement (read our post), every aspect of your financial live become an issue in the divorce procedure.

The main two issues to consider are: separation of assets and support.

Depending on the country or the state you live in, divorce laws are different.  You should check with your attorney the governing law of your state.

Regarding the assets, all property acquired during the marriage, if not noted otherwise on a prenuptial agreement, should be divided between both partners.

That means any real estate, any bank accounts, any investment accounts, any business you have together, retirement plans, any cars, boats, art, etc.

You should make a list of all assets and agree with your partner on the division.

You can sell the assets and divide the proceeds or you can arrange who keeps what.

And don’t forget about debts! Debts acquired during the marriage are also shared.

Your husband bought a motorcycle and he is the only one who drives it, you will never ride one.  Doesn’t matter! If it was bought under both names, you should pay off the debt or it should be jointly assumed.

It is important you check your credit standing before the divorce. 

Be sure you know of all debts under your name: credit cards, loans, taxes.

What happens if you used money you had before marriage for the down payment of your house:  You should have these documented!!  It should be clear that it was money made before the marriage.

I cannot emphasize more the importance of getting all the records you can find.

The Home: If you decide to keep the home, you will be responsible for the expenses: rent, mortgage, maintenance, etc.  If you move out of the home, and your name is in the contracts you are still liable for all debts.

The Business: Do you have a business together?  Is there a way to separate the business?  Can you buy your partners’ participation or can he or she buy yours?

Joint accounts:  You need to separate them

Retirement Plans:  You need to review the separation with your accountant.  You should receive the funds under an IRA account to avoid penalties, unless you are over the retirement age.

These are just some examples of the financial issues to consider.

Regarding the second part of the divorce agreement: the support or how much one spouse will pay the other to help with living expenses
The crucial issue here is how much income each spouse receives.

The definition of income is very broad, let’s say your father was a famous writer and you receive royalties from his books.  That is income.

The best you can do is get the advice of the best attorney you can afford.

Once the whole ordeal is through you need to PLAN for your new life:

Do you have a budget?

What do you know about basic personal finances?

Do you have enough insurance (life, health, property, etc.)

How are you going to preserve your investments?

Have you changed your estate plan? Do you have one?

How will your children future change?

Divorce is a very difficult life event.  The financial issues are only a part of it, but they are extremely important and should not be left aside because of emotional issues.

And there is always the bright side, as the wonderful Nina Simone says in “Feeling Good”:

“It’s a new dawn,

It’s a new day,

It’s a new life,

For me,

And I’m feeling good…”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finbliss team

It’s your financial life. Embrace it. An educational community of financially aware women helping, supporting and guiding one another.

No Comments Yet

Leave a Reply

You have Successfully Subscribed!