Whether you’re simply considering a divorce or have already begun proceedings, you likely have a lot on your mind. The end of a marriage can be a complicated and stressful time, with lots of issues to address and things to worry about. One concern typically stands far above others, however, and that is the issue of money.
The financial aspects of divorce are often some of the most challenging, but perhaps they don’t have to be. For soon-to-be ex-husbands and ex-wives, a little bit of financial planning now can go a long way toward lessening the money woes of divorce later.
Top financial planning divorce issues
Whether you were the spouse who handled the majority of the financial aspects or not, there are a few key areas you may want to begin thinking about now:
- A post-divorce settlement budget
- Social Security
- Updating legal documents
The first thing you’ll want to do is gather all of your financial information, which you can review with your divorce attorney to try and determine what your liabilities and assets will be. From there, you can begin the bulk of your financial planning.
A post-divorce settlement budget
When going through a divorce, creating a budget is a vital step. Both spouses will want to determine which debts still need paid and by whom. You will also need to address the issue of property division, such as, for example, if the house will be sold and the proceeds split, or whether one spouse wishes to keep it. Regardless, there are lots of issues to consider when determining how to divide property and assets, especially if you have children. You’ll want to review these thoroughly before making any decisions.
Alimony, or spousal support, is not always a factor, but in cases when it applies, it can prove invaluable to understand how it works and how it differs from child support, especially when it comes time to pay taxes. For example, the government does not consider child support to be taxable income for the recipient and neither is it tax-deductible for the payor. Spousal support, however, is the opposite, as payors can deduct alimony on their tax return, and the recipient must claim it as taxable income.
Social Security is confusing enough even before divorce. Afterwards, there’s a lot to consider when it comes time to claim your spousal benefits. For couples married ten years or longer, a divorced spouse can claim spousal benefits, but only for one spouse. This means complications arise if and when you may be interested in remarriage, as you may wish to consider whether the Social Security spousal benefits you are to receive from your ex are higher or lower than those you may receive from your future partner.
Updating legal documents
One important step that some individuals overlook is that of reviewing legal documents like insurance policies and IRAs to update beneficiaries. If you don’t change the beneficiary, your spouse will still receive the assets or payments after your death, which is probably something you’d prefer to avoid. Likewise, you may wish to rewrite your will and, if applicable, review documents like revocable and irrevocable trusts, as well as powers of attorney and aspects of your living will that may need changed.
When taken all at once, these issues may seem daunting and even overwhelming. Luckily, there are professional resources in Wyoming to whom you can turn for legal advice and support during this time. With experienced help, you’ll be well on your way to a brighter and more stable future, both financially and in general.