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Getting Divorced: Tips for How to Handle Your Finances Together and Apart

Divorce isn’t only an emotional separation, but also a financial one. As much as the two of you have had to agree on financial matters in the past, each individual has to manage his or her own finances once you’re apart. The way you handle your finances will determine how you live after the divorce. Here are tips on how to handle finances together and apart, and what to expect during the separation.

Understand Child Support Expenses

One of the priorities during divorce is the welfare of the kids. You need to negotiate with your partner regarding the lifestyle of the kids and everything you’ll both be paying for. This includes housing, travel, medical needs, and tuition.

Once you agree on the individual contribution towards the support of the children, try and make the payments a percentage of your income. This will make sure you keep within your income. If you can, be sure to split the costs fairly between you.

Financially Protect Your Kids
There are various insurance policies designed to benefit your kids. Consider taking out life insurance with the kids as beneficiaries. Structure the policy in such a way that it will take care of the needs of your kids when you pass on. Another suitable policy you can take out is disability insurance. This replaces lost income if you become disabled and you are unable to work. In most cases, health insurance will take care of your children’s medical expenses, which can reduce your out of pocket expenses. Doubly insure kids once you separate if possible.

Understand Your Assets, Debts, and Liabilities
You need to apply for, and get a copy of your credit report. This will give you a clear picture of the debts and liabilities you and your spouse have incurred over the life of your marriage. Your credit report will show you whether your spouse has accumulated debts that you are liable for legally. You may have to meet the debts, even though you were not responsible for paying them when you were still married.
Apart from knowing the debts and liabilities, you need to understand the value of your assets, joint checking accounts, and retirement accounts. According to Blumenauer Hackworth family lawyers, this is because when you understand what you own, you know how much you stand to get in settlement. If you don’t know the financial situation, you might end up accepting an unfair settlement only to discover later you are facing serious financial challenges.

Understand the Tax Implications
You need to understand the types of taxes you will pay for on any financial obligation. You have to pay tax on capital gains, alimony, income taxes, and many other taxes. You need to address your tax concerns early enough so you don’t end up paying through your nose later on, or getting jailed for tax evasion.

Come Up with a Budget
Since your situation has changed, your lifestyle will also change. You need to come up with a new budget so that you live within your means. If there were tasks that your estranged partner used to take care of, it is time that you included them in your budget. The budget you come up with should reflect your new status, and the changes in your finances. Apart from helping you manage your cash, a budget can give you a reality check, so you understand what to cut down.

Work with Professionals
You might develop a budget, but it might not be a true reflection of your situation. In such a situation, you need a professional accountant to help you prepare the budget. The accountant will help organize your finances and make it easier to pay your taxes, your bills, child support, and similar obligations. This helps you adjust to your new lifestyle. Work with those who know, and who have been there before to help you reach a good place after your separation.

The period before divorce, during divorce proceedings, and after the divorce can be challenging to you financially. You need to make sure you are prepared for life alone. Make sure you handle various aspects of your finances to adapt to your new life quickly.

Tim Esterdahl

Tim Esterdahl is the editor of IFCS blog. He is a married father of three and enjoys golf in his spare time.
Tim Esterdahl

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