Divorce planning is a financial process individuals must go through as they prepare for the dissolution of a marriage. Certain aspects of divorce planning are relatively straightforward, while other processes necessitate the support of a legal or financial professional.
Divorce planning should start with a simple but critical question: can the divorce be completed without involving the courts or lawyers. If there are any disputes or conflicts between parties, it is prudent for both parties to hire legal representation. However, in the event of an amicable separation, individuals can save time and money by coming to a settlement on their own. In 2019, the average divorce cost nearly $13,000, the bulk of which could be attributed to attorney’s fees. The same thinking applies to child custody and visitation rights. If spouses can come to terms on a co-parenting arrangement, they can then move forward with divorce proceedings. If one spouse is pushing for sole custody or visitation standards the other spouse perceives as unfair, the divorce may need to move into mediation. Whether an individual plans to go through with a divorce on their own or with legal representation, it is advisable to collect all marriage and financial documents. Examples of important documents include prenuptial and postnuptial agreements, estate planning documents, and all copies of life insurance policies. It is important for each spouse to understand their financial standing before, during, and after a divorce. With this in mind, it is also important to take a complete inventory of assets and debts. Other documents that can be informative during divorce proceedings include credit reports and property deeds. Individuals can begin preparing for their new lives as part of the divorce planning process. For example, a person may have bad credit as a result of a financially unstable marriage, or may have no credit to speak of because major financial transactions were made in the other spouse’s name. In either case, they should begin building their own credit as soon as possible. Similarly, there is no need to wait for a divorce to be finalized in order to set up a personal bank account or find a new health insurance plan. One of the most important aspects of divorce planning is where each spouse will live following the separation. Some couples may need or desire to sell their shared property as part of the divorce, while other divorces end with one spouse continuing to live in a previously shared home. If spouses want to sell property they can search for local real estate agents or speak to their legal and financial representation about real estate professionals specializing in divorce property sales. That said, if both parties wish to remain in the house, individuals are strongly advised to reach out to an experienced family law attorney. Finally, one of the biggest parts of finalizing a divorce involves looking to the future. If a marriage consisted of one spouse working and one spouse managing the home, the latter will likely need to prepare a resume and start looking for a job. There are several paths to additional financial support during a divorce, including alimony and temporary spousal support, as well as various forms of child support.
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AuthorGary Begnaud - EVP of Janney Montgomery Scott Office in New Jersey Archives
June 2024
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