If you and your spouse decide to divorce, you are instantly confronted with a variety of concerns:
- Who will be appointed primary joint managing conservator and who will be appointed possessory conservator (i.e., with whom will the children live and who will have visitation time?)
- How will our marital assets be divided?
- How much will a divorce cost in terms of time and money?
In regard to the last question, there is no definitive answer, as it depends entirely upon your unique circumstances. However, there are certain steps that you can take to alleviate some of the financial (and emotional) costs of a divorce.
Today’s post is the second in a series. Please see “Limiting the Financial and Emotional Costs of a Divorce – I” for more information.
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Manage your debt
Once the divorce decree is signed, both you and your former spouse will remain responsible for any jointly held debt. Accordingly, creditors are free to come after either of you.
“A divorce decree might say he gets all the joint credit card debt, but that’s not going to get her name off of the account and that’s not going to relieve her of responsibility if he defaults on them. What most people don’t understand is the fact that a loan agreement or credit card agreement will not be trumped by a divorce decree,” said Fadi Baradihi, CEO of the Institute for Divorce Financial Analysts.
If you and your former spouse have decided to continue holding join accounts until your divorce is final, it is important to make sure that all payments are made in a timely manner. You will also want make to ensure that all debts are accounted for and paid regularly post-divorce.
Explore tax issues
Once the divorce decree is signed, you may be responsible for spousal maintenance and/or child support. In addition to calculating how you plan to make these payments in a timely manner, it will also behoove you to account for any tax issues.
- Were you aware that the spouse who pays spousal maintenance can deduct the amount paid from their taxes (in most situations)?
- Were you aware that child support is not deductible and not treated as income by the IRS?
To learn more, consider speaking with an experienced legal or financial professional.
Inspect financial statements
If you and your former spouse run a business or own significant assets, you will want to ensure that they are not misappropriating or mishandling any assets.
When inspecting financial statements, look for suspect write-offs, odd purchases made in the name of the business, and unreported/underreported income.
An experienced legal or financial professional can help you learn more.
This post is for informational purposes only and is not to be construed as legal advice.
Stay tuned for more from our Ft. Worth family law blog …
- 10 Ways to Avoid Divorce Disaster (Bankrate.com)