After divorce, the standard of living of both partners drops in the first few years because the same cumulative income and assets that support one family now support two households. Most individuals don’t prepare themselves financially for that consequence. Before you can prepare yourself for this inevitability, you need to know the financial implications of divorce. Here are some of the financial consequences of divorce.
You need to consider the tax consequences of divorce if you don’t work or make a low income than your partner. You might end up depending on mutual funds, savings bonds, and other assets to make up for the loss of revenue, which has tax consequences. Also, separately filing your taxes comes with a financial burden. In fact, you will even pay more on taxes if you have children but don’t list them as dependent on your taxes.
A divorce can make you incur marital debt. If you have any joint debt, it doesn’t matter whether or not you’re involved in spending the money; you and your spouse could be liable for paying the debt.
Division of Estate
You might have lots of funds in real estate before your divorce. Everything will change after your divorce. All houses acquired during the marriage will be split between you and your spouse. This includes rental properties, business property, and many other assets. In fact, you may need to sell some of your real estate properties if you can’t agree with your spouse, which could impact your finances.
While filing for divorce won’t directly change your credit score, the financial implication that comes along with divorce can impact your credit score. For example, if you cosigned on a spouse’s loan when you were married, took out a loan together, or were listed as a joint owner of an account, those may appear on your credit, and your partner’s late payments may affect your credit after a divorce.
A divorce involving children can be very complicated. Typically, one parent will cover the cost of child support. While the amount of child support varies and depends on your income, the financial burden can be significant.
How A Divorce Financial Planner Can Help
A divorce financial planner can play a vital role during and after a divorce. In fact, seeking the help of a divorce financial planner earlier before a divorce can help you shape the divorce settlement, make the right decisions, and take control of your financial future. A divorce financial planner will look at the financial consequences of decisions made following divorce and how they can affect you in the real world.
The Tranel Financial Group Can Help
Here at The Tranel Financial Group, we can help you prepare yourself for your post-divorce financial future. Our approach adapts to your changing needs. Our divorce financial planners can help you with the complex decisions related to divorce and help you plan for the future. Contact us today at 847-665-1862 to know where you stand.