Filing for divorce is never an easy decision. Once you've made the choice, there are a number of considerations that make it mentally, emotionally, and monetarily taxing. As we discussed in my previous article on how to prepare for divorce, one should consider the amount of money it will cost, the income that needs replacing, and the financial changes and sacrifices that may happen.
After filing for divorce, you need to shift from preparation or contemplation to action.
Having the proper guidance, stamina, and ability to let go can help when travelling the rollercoaster to follow.
It’s important to hire a trusted attorney, CPA, and financial advisor during the process. Especially since many of the decisions you make during a divorce have long-term legal and financial ramifications. Talking with someone who knows what’s important to you – as well as knowing important tax, investment, and legal strategies – can help increase peace of mind during this stressful time.
Lisa Y. Wilson, a licensed associate professional counselor in Atlanta, Georgia, recommends including therapy costs as a part of a divorce budget. Group counseling may be a more cost-effective option if individual counseling is not in the budget. Group counseling can range from $40 to $60 per session, while individual counseling ranges from $75 to $200. Therapy can address your personal trauma, blocks, and blind spots so that your next relationship is healthier.
Saving Your Credit
When couples are fighting over money, assets, and liabilities, it’s easy to stop paying bills to get back at the other partner. The best way to save your credit is to keep paying any bills that impact your personal credit. Creditors don’t care that your marriage didn’t work out. Paying your bills on-time and keeping your debt low will benefit you in the long run. You won’t regret keeping your good credit, but you will regret losing it just to get back at an ex-spouse.
Splitting Assets
“What’s mine is yours and what’s yours is mine” isn’t the case anymore. And depending on how long the marriage lasted, it can be difficult to remember what belongs to whom. Make a list of all the assets you own together using a financial inventory. Notate the things that are unarguably yours. For example, if you came into the marriage with a house or a business, then mark that as yours. This is not to say that you won’t have to give up some things in the negotiation – this is just so that you’re clear on what you own.
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Once you know what you own and what’s likely yours, then put them in order of importance. When it comes time to negotiate, you will need to know what you are willing to give up the easiest.
Some things are not worth fighting for, while others are. Know the difference.
Retirement assets can be difficult to negotiate, especially if one partner opted not to work during the marriage. This partner may not have retirement assets and may be entitled to a portion of the assets of the working spouse.
Financial Plan
At some point, you will need to adjust your financial plan, and the sooner you do that, happens the better. With new financial goals, the focus can shift from past to future. Continue to fund your goals as much as possible. Remember that you don’t have to spend all your assets on fancy lawyers – negotiation and mediation are excellent, lower-cost alternatives to litigation.
The average negotiated no-fault divorce can cost less than $1,500, while the average litigated divorce can cost $50,000 on the low end, says Kelley Linn, founder of Transitions Resources. Linn suggests that couples should start by hiring attorneys to first negotiate. Then, if that doesn’t work, move to mediation. If you still can’t find a resolution, then move to litigation, but don’t start there.
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The longer the divorce, the more taxing it can be on your financial and mental health. Add up the cost, the loss, and divide it by two – then multiply it by 10, because that is often how it feels. Pushing through divorce is more than settling accounts – it’s about the new life you want to create.
This is the second installment in a four-part series that will appear every Wednesday during the month of June. To read Kiné Corder's previous piece, click here. To read her next piece, click here.