Let’s face it—divorce can be a complicated, complex process that can take a serious toll on everyone involved. Divorce and financial concerns go hand-in-hand. You and your spouse will be tasked with creating a plan on how to split marital assets and debts and by using a financial professional, you can ensure that the split maximizes your assets and any tax breaks available to you. You’ll then need to determine how to maintain financial stability after your divorce is finalized.
Almost everything has financial value, and not all things are created the same. So how do you manage the value of things? Here’s what you need to know about money during a divorce.
Money During Divorce
When it comes to finances and divorce, things can get complicated—quickly. It’s best to have a solid understanding of the marital finances. It’s important to work with an experienced professional who can walk you through the complex process of handling money during a divorce. A CDFA®, or Certified Divorce Financial Analyst, is specially trained in all of the financial aspects of divorce and can help both of you make fully informed, educated decisions.
Create a Budget
If you are considering, or experiencing, divorce, you should first make a budget. I know, the word “budget” probably just made you cringe. Most people think “diet for your money” when they hear the term budget and the feelings it evokes are similar. But it’s important to have a clear understanding of both historical and current income and expenses. During the divorce process, historical expenses and standard of living will play a large role in determining spousal support and child support, both on a temporary basis and in the longer term.
Creating a budget will also help to reveal special expenses. These expenses can include costs of school tuition, specific or specialized medical expenses, and more. Sometimes, one spouse may be attempting to shelter or hide income or holdings. In this case, historical and current financial statements can help to show inconsistencies between actual budgetary expenses and any declared income.
A Divorce Financial Planner can sit with you and go through your expenses, income, and help to create an accurate picture of the family spending.
Consider Your Options
When it comes to separating, couples have a few options that range from do-it-yourself to full litigation. A collaborative divorce is an option that has been gaining popularity. It falls between mediation and litigation on the spectrum by keeping you out of court, but ensuring you have an attorney advocate as well. The collaborative divorce process allows you to have more control over the outcome of your divorce. Because you avoid court, this option can be less expensive than traditional proceedings or other alternative divorce methods like mediation.
Things to Consider
It’s not uncommon to feel as if there is never enough to go around when dealing with money during a divorce. You will need a financial plan moving forward. And it’s important to consider the additional costs and monetary changes you will have to make. There are legal and professional fees, the cost of two households, necessary travel fees—the list simply goes on. And when you consider the time off from work and potential added travel needed during the divorce process, it’s easy to see how dealing with money during divorce can be stressful.
Working with a team of collaborative divorce professionals can save you time and money during a process that is already difficult. Both sides can avoid the costly emotional and financial expenses of a nasty divorce when you design a comprehensive plan that benefits all parties.
Money is something you will feel like you don’t have enough of when facing or experiencing, divorce. Making the decision to work together to find an amicable way to separate is the first step in a healthy separation that benefits everyone involved. It’s important to work with a trusted, financial-neutral as part of your team of collaborative professionals who have an in-depth understanding of all the complex moving parts that will create your financial foundation after divorce.