A divorce is a life changing experience to say the least. For some, it can be the worst point their life. For others, it can be a new chapter with hope and anticipation of better things to come. In either case, the divorce process itself can sometimes be complicated and stressful, but if you take a proactive approach to the challenge ahead you can come out the other side worse for wear.
5 Tips for Financial Planning When Going Through a Divorce
In this blog, our Denver divorce lawyer looks at five areas that spouses should consider when getting a divorce, or even after their divorce is final. But the sooner you plan, the better off you might be in the long run.
- Settlement Budget – Obviously, once you have committed to a divorce, you are now operating on a single income. So, it’s best to start planning a budge based on your sole income. You’ll want to get a ledger notebook, or even just a piece of paper, and right down all your income revenue sources. Then have another column for monthly expenses and expenditures (food, utilities, rent/mortgage, gas, children expenses, etc.). You’ll get a bare bones look at your assets and liabilities, or what you’ll have to work with moving forward. This is also a good place to put down a few financial and personal goals, such as a vacation, a new home, or vehicle.
- Planning for Your Kids – Did you want to set up a trust for your kids’ college fund? If your kids are older, you might want to think about a savings account for weddings. Child support may also be a court ordered requirement for you or your spouse, and it is not tax-deductible for the person who receives it. However, the person paying child support can deduct the payments made on their tax returns.
- Alimony – If you are the bread winner of the family, there may be a court ordered alimony payment required. This is actually in addition to child support, if you both have children. Alimony is considered income, so whoever receives it will need to plan accordingly. In 2017, an individual can contribute up to $5,500 a year. Also, depending on your contribution and tax situation, you may be able to deduct the contribution to your traditional IRA.
- Social Security – Here’s one not a lot of people know about. If you were married for more than 10 years to the same person, you can claim spousal benefits on your former spouse. However, if you plan to remarry, that person loses the ability to claim spousal benefits on their ex-spouse. This actually plays into some people’s decision making about remarrying, too. Because if the new person they plan to marry makes less money, then you stand to get less spousal benefits.
- Rewrite Will and Update Important Documents – If you had a will or estate plan with your ex-spouse, you’ll want to make new ones. But, it doesn’t hurt to work off the old one to give you an idea of items that need to be covered. Be sure you revisit any documents you have named beneficiaries on, so that you can put new designated beneficiaries in the place where your spouse was once mentioned. The documents would include life insurance policies, IRAs, and 401(k)s, etc. Then, it’s a good idea to rewrite a new will and estate plan based on your new status. If you have children, it may be necessary to plan guardianship with your ex-spouse. It’s also a good time to review any trusts you might have, and see if any are revocable that need to be changed.
Do you need a will, estate plan, or trust made for your family? Or, do you need legal advice going over your documents after a divorce? If so, contact a Albuquerque Divorce Lawyer at Sutherland Law Firm, LLC. Call (575) 708-9000 or email our firm.
You wouldn’t trust just anyone to helping you plan your future, which is why you need the trusted and experienced legal services of the Sutherland Law Firm. With nearly 15 years of legal practice under his belt, Albuquerque Divorce Lawyer William Sutherland promises to deliver compassionate and effective legal representation. He will focus hard on all the issues you need resolved, when going through a divorce.