Financial Issues in Divorce

Divorce can be an extremely difficult process.

A divorce can create profound difficulty, with emotional and psychological repercussions. It’s important to remember, however, that divorce can also produce financial difficulty for both parties

When you marry someone, you agree to share all of your money and assets. When you break up, the assets have to be divided again. Here’s a little more information on the ins and outs of divorce and finances that can help you get through the process.

Legal Help?

Divorce is a legal process and, consequently, you may need help from a legal professional to see the process through.

If your marriage has ended on positive terms, you may come to mutual agreements and deal with the financial split yourself. But if not, a divorce attorney will be able to help to ensure that each person gets what they are rightfully entitled to. This can make the process a lot more streamlined and much faster.

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How Assets Are Split in Divorce

If things do go to court, it’s a good idea to be familiar with how courts split assets. There are several factors that can determine how money is shared, including:

• How long you and your partner have been together
• Your age
• Your ability to earn
• Your role within the marriage
• The lifestyle you have both become accustomed to

Dividing Property

While you will both have a right over your shared property, you clearly cannot just halve the property. So, who gets to keep it? Well, if one person isn’t willing to let go of the property, the court will encourage you to sell it and split the sales proceeds equally.

Maintenance

Sometimes one partner will earn a whole lot more money than the other, or the other spouse may not work out of the home. In situations such as this, the partner who doesn’t work, works fewer hours, or earns less, may contribute to your shared lifestyle in other ways, including child care.

Generally speaking, the court will encourage the person who earns more to contribute maintenance payments that will allow the other to maintain the same quality of life that they were used to within the marriage. These may be set for a period of time, or they may continue until the person receiving the payments enters into a new partnership.

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How To Recover

If you go through a divorce proceeding, here are some steps you can take to recover financially.

The reason that people don’t diet, don’t exercise, and don’t resolve bad personal relationships is that change is hard. As a result, we don’t really, truly change and grow unless we’re in real pain. When we’re at that point, the pain of change is less severe than that pain of not changing.

 

Discipline and time

With discipline and time, I think most people can accumulate far more wealth than they think is possible. But growing wealth requires change- which is precisely why most people don’t make the effort. The changes I’m suggesting involve an old friend:

Delayed gratification

Some decisions are relatively small:

• Dropping a subscription music service and just listening to the free version (Pandora, for example).
• Making coffee at home two days a week, which means that you stop by Starbucksless often.
• Buying afew more generic products when you go to the grocery store and Target. (I’m not going generic on salad dressing, however).

Since these are smaller decisions, the amount of gratification you’re delaying is small. You don’t mind listening the commercials on Pandora (I certainly don’t- I just turned down the sound), and the coffee at home isn’t bad.

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Other decisions are much bigger. StudySoup wrote this great article on the average amount of money a college student saves by having a roommate. The average savings over four years is over $15,000. Now, having a roommate is a big sacrifice, because you lose a fair amount of privacy. If privacy is really important to you, it’s a true delay of gratification (until you graduate, get a job and can afford to live alone).

So, what do I get?

OK- so what do I get out of all this delayed gratification?

You build wealth- which can give you peace of mind.

Here’s a practical example: By making changes to your spending and building a savings account, you create a $1,000 emergency fund. If your car brakes down, you can pay for the repair.

Decide Carefully

As you can see, finances are a large part of the divorce process, and you need to ensure that you don’t leave your marriage with less than you’re entitled to. Hopefully, this information can help you to get what you deserve.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

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