You’re getting married! That’s great news. Unfortunately the statistics on divorce today could give you some pause before you take the plunge. Though no one wants to start out thinking about splitting up, it is a reality that a lot of people do consider and it’s best to be prepared. Years ago, such thinking gave rise to the pre-nuptial agreement. It was originally intended to protect women who didn’t want to end up homeless after divorce or death of a spouse; in the U.S. prior to the Married Women’s Property Act of 1848, everything a woman either owned or inherited was transferred to her husband. The financial consequences of divorce could be far reaching, and it is best that the potential outcomes are contemplated at the beginning of the marriage process.
A divorce can be resolved either by litigation or a settlement. In either case, the divorcing couple should know what they have in terms of assets and liabilities. Being aware of your financial situation will go a long way whether you choose to litigate your matter, settle the issues without Court, or use another means of alternative dispute resolution. The financial consequences of divorce will also likely include tax implications, retirement consequences, and implications for college education if you have children so it’s important to know about how that could impact your settlement.
Being aware of your credit history is another important financial aspect of divorce. Debts incurred during marriage may be attributable to one party or both parties at the end of the divorce. Although both parties may not have benefitted from a loan for example, either spouse could be held accountable. Outstanding debts could cause problems should either party seek a new loan to help finance his or her new life or could be the basis for either party filing bankruptcy.
If child support or alimony is part of a divorce settlement it’s important to understand the financial consequences of how those payments are made or received, and the impact on other financial considerations once the parties are independently financially responsible for their expenses.
If you’re in a marriage ore relationship where one person is handling all the bill paying or all of the financial assets/liabilities for the family, it would be a good idea for you to get educated on just what’s required each month if that responsibility now becomes yours. Avoiding late payments can make the difference between keeping a good credit rating and falling into a less than optimum credit situation.
Although retirement may be far down the road, it’s wise to consider retirement years when going through a divorce as well. The financial consequences of divorce can impact how you’ll spend retirement years if you don’t plan for it in advance, and is especially important if you’re divorcing after age 50.
Another key point to take into account is the change in life-style that inevitably comes with dividing households. Reduced income means adjusting to a new set of circumstances that may require reallocation of finances. Keeping a close eye on your spending, living within your new budget, staying debt free with a good credit rating and saving for retirement must be top priorities.
Working with good legal professionals can be very beneficial. The attorneys at Jacobs Berger, LLC can assist you in putting together a life plan which accounts for financial security following divorce. For more information or to meet with one of our attorneys regarding your upcoming divorce, give our office a call at 973-718-7705.