Financial Benefits of your Morris County Divorce
There is a light at the end of the tunnel…
The ending of a marriage is often a life-changing experience. While there is certainly a stigma of negativity attached to the idea of a divorce, the fact of the matter is that it can be life-changing for the better.
While divorce issues such as alimony, the division of homes, and the division of other complex assets are the most common financial concerns that come with any divorce, in today’s article our Morris County divorce attorneys will be discussing the various financial benefits a divorce can have for any individual, and how we can help you take advantage and enjoy these varied financial benefits.
Taxes, Financial Aid, and Randolph NJ Divorce
Perhaps the most universal financial benefit of divorce is the simple idea that each party is given a great deal more financial freedom than they would have as a couple. Maybe one partner’s spending habits were a risk to the marriage’s finances, or maybe it was disagreements over finances which lead to the divorce in the first place (one of the most common causes for divorce in New Jersey and Morris County).
Beyond these basic benefits, divorcing individuals may also enjoy other financial gains such as:
- Penalty-free early access to a retirement fund – Divorce is one of the few times a person is able to withdraw money from a retirement account early and not pay a penalty. An agreement known as a “Qualified Domestic Relations Order (QDRO)” allows for a penalty-free early withdrawal from a retirement account as part of a divorce. However, only certain types of retirement funds qualify for this QDRO; please read our page on dividing retirement assets to further familiarize yourself with this issue and your options.
- Higher financial aid for kids in college – While divorce may at times be a difficult adjustment for for children, there is one place where there divorce can be a benefit for kids: college financial aid. The Free Application for Federal Student Aid requires financial information from only the custodial parent as opposed to both parents. This allows the student to appear in a lower socio-economic bracket and thus increases the aid package offered.
Madison NJ High Net Worth Divorce Financial Advantages
Beyond the ideas discussed in the above section, higher net worth couples may also enjoy unique financial benefits as a result of their divorce. Specifically:
- Higher Investment Returns – In this article by Fidelity Investments, the idea that men and women invest differently is analyzed and discussed at length. Extrapolating on our earlier point regarding increased financial freedom, a high net worth divorce will allow men to be more aggressive with their investments (something with which women are found to not be as comfortable), while it is found that women often invest in more stable (and often profitable in the long-term) areas.
- Avoid the Alternative Minimum Tax – The Alternative Minimum Taxation (AMT) system was established in 1969 and was put into place to prevent the wealthy from receiving so many tax deductions that they would pay little to no taxes. Although some couples may not necessarily be “wealthy,” the tax code places many of them in a higher tax bracket when their joint income is taken into account. The AMT system also prohibits many deductions that are allowed in the regular tax code, affecting many married couples and their children. Joint filing when one spouse earns $40,000 annually and the other earns $110,000 makes the total income $150,000. This places the couple in a substantially higher tax bracket as opposed to the one earning $40,000 being in a much lower bracket as they would be filing a single return. Avoiding the ATM could spell a savings of thousands of dollars in yearly personal taxes.
Contact Our Morristown Divorce and Finance Lawyers Today
At Jacobs Berger, our attorneys have extensive experience helping clients to effectively resolve their divorce and its related issues of asset division, child custody, child support, and alimony in towns across New Jersey and Morris County, including Madison, Morristown, Randolph, Florham Park, East Hanover, Morris Plains, Dover and the surrounding communities.
Part of what sets us apart from other law firms is our focus on helping our clients through every aspect of a divorce, not just legally, but financially and emotionally as well. With a network of proven and effective professionals in place, we can recommend our clients to other professionals we trust such as financial consultants, career planners, and even mental health professionals and other social services.
To speak with a member of our legal team today in a comprehensive and confidential case assessment regarding your divorce or other family law issue, how we can help you to plan for your financial future through the agreements we aim to reach, and how we can advise and guide you throughout the legal process, please contact us online, or through our Morristown office at (973) 718-7705.