Finance 101: Divorce? – The Martha’s Vineyard Times

If you are divorcing, the impact to your finances could be significant, whether you are handling the process via mediation or are headed to court. And I am not talking about the legal bills, which can be considerable. Mistakes and lack of preparation can be very expensive, and tax situations can wreak havoc. To be best prepared for the next phase of your life, consider the following questions and ideas. Talking to a professional planner before you go down the road to divorce can be a smart move.

  • If you have a reasonably good idea of what assets you will end up with, then you need to create a budget from your income sources, assets, and expenses.
  • Once you have that budget, you need to have a solid financial plan to cover your obligations and goals. This determines your current and future financial health. It is your map to navigate to the future you hope to have, and to make sure you will not run out of money in old age or before. Knowing what your future may look like before you accept any settlement can help you negotiate the most equitable agreement.
  • Make sure you plan for such goals as college costs, your retirement, healthcare costs, and whatever else you would hope to do that requires money.
  • If you are receiving financial assets such as retirement plans, IRAs, pensions, or any other financial benefits, you will need an effective attack plan to understand your options and obligations. Remember these all have their own rules and tax implications, which can have a large impact on what you can and cannot do.
  • Think about whether the financial assets you may receive are going to be the right ones for your new life. Just because you have received, say, IRAs in a settlement doesn’t mean they are the right ones to serve your new life and needs.
  • If you are receiving part of ordinary investment accounts, you need to be aware of tax consequences if you change the investments.
  • If real estate is part of your settlement, make sure you have a very good idea of what the true…

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