How to Avoid Going Broke During and After Divorce
While the overall rate of divorce has been declining for several years, approximately one-third of the couples married today will, at some point, seek a divorce. Unfortunately, the costs associated with ending a marriage financially cripple a large number of those going through a divorce. However, there are strategies divorcing couples can use to minimize their financial exposure.
Carefully Inventory All Property
Virtually every divorce attorney will stress the importance of accurately inventorying all property held jointly or individually by the couple. As an experienced Raleigh Family Lawyer I generally wish to see evidence of all properties, including deeds, titles to vehicles, bank statements, and retirement accounts. Of course, there are other items to document as well. Expensive jewelry, collections, and even items like time-shares all must be accounted for.
Defining liabilities (or debts) is just as important. While it may not be that common, it’s not unheard of for one partner to incur debts of which the other partner is unaware. At Kurtz & Blum, PLLC, we also encourage every client to obtain up-to-date credit reports outlining all outstanding debts including credit cards, car loans, and student loans.
Set a Budget
While it’s often difficult to predict all divorce expenses, a Raleigh Divorce Attorney will help clients create a list of expenses commonly incurred during a divorce. The list can be a little depressing, but it’s always better to fully understand the financial ramifications of going through a divorce.
Perhaps more importantly, it’s vital to extend the budget to cover all expenses once the divorce is finalized. Splitting a household means each party will now have expenses for things like rent or a mortgage payment, utilities, automobiles, and other costs previously shared. When child support or alimony are added to the list, budgets can get stretched fairly thin. Many divorcing couples quickly realize their lifestyles may have to be revised to meet their new financial realities.
Pay Close Attention to Financial Details
Many individuals find themselves responsible for paying bills and budgeting when they have little prior experience. That means it may pay to visit a financial advisor for advice on how to properly set a budget and sticking to it. It’s also important to monitor bank accounts and credit reports frequently to spot any potential issues. If things get tight, most financial advisors recommend clients avoid using credit cards whenever possible to avoid making their financial issue worse.
One of the issues couples often do not properly consider is the tax ramifications of a divorce. I encourage our clients to seek financial guidance to mitigate any tax liabilities as much as possible. For example, when joint property is liquidated, the tax ramifications can quickly eat up any equity. It’s always important to understand how a couple’s tax situation will be impacted during and after a divorce prior to finalizing an agreement.
Plan for the Future
At Kurtz & Blum, PLLC, we suggest our clients start exploring ways to enhance their investment portfolios and review their retirement accounts as soon as possible. While considering and planning for all the expenses involved in a divorce may be timely and difficult, it’s extremely important to start planning for the future sooner rather than later.
We’re Here to Help
Going through a divorce is never easy, but we’re here to help clients get through the process as quickly and inexpensively as possible. We don’t pass judgement on anyone. Our job is to make sure every client gets the best representation possible. If you’re currently considering a divorce, now is the time to discuss the situation with a Raleigh Divorce Attorney. At Kurtz & Blum, PLLC, our staff of professionals is here to assist you throughout the divorce and make sure you’re on a solid financial path for your new life.