Divorce isn’t a decision that most people take lightly. It’s a decision that will significantly impact your life and one that is best made after sufficient thought and planning. This is certainly true when it comes to finances. Financial planning before a divorce is helpful in many ways, and you’ll want to be certain to have a clear understanding of your financial situation before moving forward with a divorce. Doing so will allow you to create a plan of action to ensure you make the right choices for yourself and your family.
There are several financial matters to consider as you plan and prepare for the possibility of divorce. These include:
- Insurance: When a couple decides to divorce, each spouse will want to seek separate insurance coverage. This applies to car insurance, homeowner’s insurance, health insurance, and any other policies that the couple may previously have held jointly. While in some cases, one spouse may be able to keep the other spouse on their insurance until the official date of divorce, planning ahead and budgeting for two separate sets of policies will ultimately be necessary.
- Child Support and Other Childcare-Related Expenses: Following a divorce, it is likely that the parent who has less time with the children will be paying child support – particularly if that parent is the higher earner. In North Carolina, as in most states, the amount of child support can be determined by a court following litigation or decided by the parties in a settlement agreement they have negotiated on their own. If the court decides the amount, it will typically use a set of statutory guidelines to determine the amount based upon factors like the parties’ salaries and the custodial time each parent has with the children. If the parties decide to determine a child support amount on their own, there are very few limits on how they can do so, and they can structure the amount and timing of the payments in a way that works best for their family. As they attempt to do so, they will want to consider various expenses, including extracurricular activities, travel, birthdays, education, and any other costs that may regularly be part of caring for the children.
- Alimony: Unlike child support, spousal support is not necessarily guaranteed – either in amount or in duration. Some spouses are mistakenly under the assumption that they will automatically be entitled to alimony upon divorce, but this isn’t the case. Alimony, like child support, can be ordered by the court or agreed upon by the parties. If the matter is left up to a court, any award will likely depend on one spouse proving financial dependency upon the other. Other factors will include age, length of the marriage, the ability of each spouse to find work, the standard of living established during the marriage, any marital misconduct that may have occurred, and other similar factors. Even when alimony is awarded, it typically will not last indefinitely. As a result, it is wise not to create a budget that is largely dependent upon alimony.
- Living Arrangements: As couples plan financially for a divorce, determining living arrangements can be one of the most significant financial factors to consider. Sometimes, couples assume that if one spouse stays in the marital home, there is no need for financial planning. This simply isn’t true, though. Certainly, moving into an entirely new residence will usually mean moving fees, furniture purchases, and other associated expenses. But regardless of whether one spouse stays in the marital home or not, divorce means going from one set of bills to two, in terms of things like utilities, homeowner association dues, repairs, and taxes, to name only a few of many potential expenses. As a result, both spouses need to consider not only rent or mortgage amounts, but these other costs as well.
- Taxes: Even if a couple plans to divorce, they can still file a joint return if they are still married at the end of the calendar year. While that is the straightforward news, the truth is that taxes during a divorce can become complicated – particularly if a couple has been married for some time and division of numerous assets and/or debts is required. As a result, consultation with a financial professional, as well as a knowledgeable and experienced divorce attorney is always advised. Understanding the tax implications for your unique circumstances will be essential as you try to budget and plan for the future, both during and after the divorce.
- Legal Fees: Divorce, like any legal matter, can become expensive. Both parties must understand that they will need to pay legal fees as part of the divorce, as a couple cannot share an attorney due to the conflict of interest. Depending upon the attorney in question, there may be an initial consultation fee, followed by a retainer, or the attorney may bill by the hour. It is essential to discuss costs and billing methods with an attorney before proceeding with your divorce. You will likely want to consult with several attorneys to get an idea of billing and what you can afford and to be sure that the attorney is someone you would work well with. It’s also essential to remember that although most divorces will require payment of some attorney fees, the cost can be significantly reduced when the divorce is amicable, the couple communicates and cooperates openly, and most matters are resolved out of court. Typically, the more complex and contentious a divorce is, and the more issues the parties litigate in court, the more expensive it will be.
These are only a few areas of many with respect to which financial planning will be helpful as you contemplate divorce and the best path forward to the future. At The Law Office of Dustin McCrary, we’re here to walk with you on that journey and guide you each step of the way.
The Law Office of Dustin McCrary – Here for You
At The Law Office of Dustin McCrary, we understand that divorce can be difficult and painful. The good news, though, is that divorce can also be the start of a beautiful, brighter new chapter ahead. We know that from our years of experience representing clients just like you – clients who made it through the difficult moments and onto a fresh start and a new future. We’re here to help you do the same. Regardless of the issues you confront – whether financial or otherwise, we know the best legal strategies to pursue on your behalf. If you’re ready to take that first step today, give us a call. We look forward to speaking with you soon.