Going through a divorce can be one of the most traumatic events of your life. It can also be emotionally wrenching for children and your extended family. Marriage vows are meant to last a lifetime, but unfortunately, divorce has not only become relatively easy in the U.S., but it has also sprung up an entire multi-billion dollar industry. The bottom line is that divorce is hard, but it’s also expensive. That said, you need to be aware of all your options.
Getting Over the Financial Hurdles of Divorce in 2023
Says Laura Gillis, a Phoenix divorce lawyer, if you’ve made the decision to file for a divorce from your spouse, it is of vital importance that you are made aware of all your available options. Plus, you need to know your rights which can vary from state to state. You need to get the best advice on the right steps to take long before the legal proceedings begin. Otherwise, you could find yourself spending a fortune you don’t have.
According to a new report by The Balance, when it comes to money and divorce, you can expect considerable financial strain placed on top of the emotional turmoil that always accompanies even amicable divorces. The sad part is that with all the complications a divorce presents to both spouses, they often become shocked, if not overwhelmed, by the abrupt changes that occur to their finances.
But, if you can enter into the divorce knowing what to expect regarding the financial impact and, at the same time, hire a team of professionals who can guide you along the way, you have a chance at handling the expenses associated with a split in the most expeditious manner possible.
From tax implications to the splitting of marital assets, here are some of the best ways to get over the financial hurdles of divorce in 2023.
Taking Control of the Cost of Divorce
States The Balance, there is simply no way around the legal expenses that go with getting divorced. Says one California divorce attorney, the more time you spend with your lawyers trying to figure out custody and asset division, the more you end up paying in fees. Also, the longer the dissolution process drags out. That means you can expect monthly bills that can easily run into the high five figures.
The best possible solution for keeping legal fees to a minimum is to seek out amicable solutions when it comes to dividing custody and marital assets. An even better idea is to do this before hiring your divorce lawyers. For example, if you agree to split everything fifty-fifty, it will help lower the costs of lawyer fees since they won’t be spending a lot of time trying to figure out which partner is owed what asset.
Unfortunately, most divorces become contentious and spiteful. But if the soon-to-be-parted couple can get over their heated emotions and work together one last time, it can save them a lot of money.
Seek Out a Financial Professional
If nothing else, divorce is a major financial event. It’s a good idea to seek out the advice of a financial professional if you wish to preserve your wealth over the long run. This is especially true if your finances as a married couple are complicated, or so says a California-based wealth advisor.
Despite hiring a divorce lawyer, working with a financial advisor or a CPA will assist you in understanding the long and short-term impact of how and when marital assets get divided. For instance, an individual retirement account (IRA) that’s worth around $750,000 taken along with property that’s worth the same amount might look equal on paper. But the tax implications for both are not the same. You need to be aware of the details of how the values of both assets can be altered post-divorce.
Splitting Marital Assets
The rules of divorce vary from state to state in the U.S. This means that depending on where you live, there will be different rules regarding which spouse will get what when it comes to splitting up marital assets.
Should you happen to reside in one of nine community property states which are WI, WA, TX, NM, NV, LA, ID, CA, and AZ, the divorce rule is that all assets and properties that were acquired during the marriage by both spouses are deemed joint marital assets. In the end, the couple divides these assets in a 50/50 split.
In all the remaining states, the assets are divided up on a case-by-case basis. But if the divorcing couple manages to work up an amicable deal, assets can be divided evenly. It also makes sense for the divorcing couple to sell off some assets to pay off any lingering debt.