Divorce is a financial upheaval – no question about that. In divorce, you lose the financial assistance of your spouse, which can have several implications. Taxes, retirement, mortgage, education – now, it's all on you to take care of. So here are some tips for couples to help you stay afloat as you transition to your new, single-income life.
- Keep it civil. A surefire way of making a divorce expensive is making it bitterly contested. Choose your battles carefully, or you'll end up blowing a huge amount on legal fees. Work together with your spouse on the necessary financial preparations for your divorce, such as organizing information on assets, investments and retirement before discussing your divorce with your attorney.
- When choosing what assets you want to keep, choose wisely. A common mistake that couples can make in property division involves failure to consider future costs and financial burdens of certain assets (real estate comes to mind). If one spouse wants the house, for example, that spouse should consider whether he or she will be able to afford it on a single income. And it's not just the mortgage; sooner or later, the house is probably going to need some serious maintenance. Don't forget about the tax implications of chosen assets as well.
- Minimize your financial ties to your spouse. That means making sure your joint bank accounts return to single user accounts and that your name is no longer on things like your spouse's credit card. This is hugely important because divorce does not automatically separate these joint finances, and if something goes wrong (your spouse goes bankrupt, defaults on a loan or some other financial disaster) then you can be held liable for it.