Surviving Divorce Financially

Money is a hot subject in many relationships. With the tough economy, financial pressures are more difficult than and can cause marital turmoil and even lead to divorce ever. If you as well as your spouse have reached the breaking point and are considering filing for divorce, there are steps you should economically take to protect yourself. When negotiating a divorce settlement, marital debts and assets will be divided.

It is important to keep in mind that the spouse with the responsibility to pay a bill based on the divorce order might not be the only person legally responsible for your debt. Joint accounts remain joint accounts after a divorce legitimately, and if the ex-spouse responsible for the debt will not pay, it could harm the credit score of the other. Creditors may pursue both parties for payment of the debt also.

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All joint accounts should be canceled before you apply for divorce. When possible, these accounts also needs to be paid completely. Outstanding balances on joint accounts remain the responsibility of both parties, so it is most beneficial to pay them off to avoid future credit and issue problems. In the event that you own a genuine home, you should be sure that if you plan to keep it that you will be able to pay the mortgage repayments, taxes and maintenance on the property. The ex-spouse who keeps the house is at an advantage if the mortgage remains in the name of both parties.

Having your name on an existing home mortgage can count number against your debt-to-income percentage and make it difficult to obtain a loan for a fresh home or car. If you’re not the one to keep the home, you might consult with your divorce attorney about negotiating with your soon-to-be ex-spouse about refinancing the home loan to get your name from the loan. You should make sure that if you receive child support obligations they may be property classified as child support in the divorce negotiation contract. Child support is non-taxable, as the recipients of alimony must pay fees on the money.

If the divorce arrangement denotes the payment as alimony, or lumps alimony and child support collectively as family support, all the money received may be subject to federal income taxes. Without an structured plan, your share of such assets could be greatly diminished by fees and penalties. Your lawyer and CPA might work together to develop a strategy to help you keep more of your money.

After divorce, you should change the beneficiaries of your will immediately, pension and investment accounts and insurance policies. If the proper changes aren’t designed to these documents, you may leave behind a legal battle for your heirs. This is overlooked and can rob your children often, grandchildren or partner of financial security in the event of your death.

You may not be able to get either a very existence or a term life insurance policy then. Or your new plan could become expensive extremely. This is where very existence insurance comes in. Once it’s clear your child will require a death advantage, regardless of when you away pass, a complete life plan might maintain order. It shall ensure that you’re protected forever, even though you become ineligible for a fresh life insurance policy. Some financial planners also recommend long lasting life insurance to offset estate taxes for your beneficiaries.

But this should be one part of a thorough property plan. To flesh this out, let’s go through the possibilities with term vs. We’ll look at situations for Sam, a 35-year-old man in Colorado. Sam has two kids and a wife, and wants to have the ability to cover their debt and replace a few of his income if he dies.