Lifestyle Read Time: 3 min

A House Divided

The latest research suggests that divorce rates in the U.S. have been falling in recent decades. Still, many people face the difficult crossroads that comes when their marriage ends.1

Getting a divorce is often a painful, emotional process. Don’t be in such a hurry to reach a settlement that you make poor decisions that can have life-long consequences. If divorce is a possibility, here are a few financial ideas that may help you prepare.

The most important task you can do is get your finances organized. Identify all your assets and make copies of important financial papers, such as deeds, tax returns, and investment records. When it comes to dividing up your assets, consider mediation as a low-cost alternative to litigation. Most states have equitable-distribution laws that require shared assets to be divided 50/50 anyway. When a divorce becomes contentious, attorney’s fees can accumulate.

From a financial perspective, divorce means taking all the income previously used to run one household and stretching it out over two residences, two utility bills, two grocery lists, etc. There are other hidden costs as well, such as counseling for you or your children. Divorces also may require incurring one-time fees, such as a security deposit on a rental property, moving costs, or increased child care.

Finally, dividing assets may sound simple, but it can be quite complex. The forced sale of a home or investment portfolio may have tax consequences. Potential tax liability also can make two seemingly equal assets have varying net values. Additionally, when pulling apart a portfolio, it makes sense to consider how each asset will suit the prospective recipient in terms of risk tolerance and liquidity.

Remember, the information in this article is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

During a divorce, many factors compete for attention. By understanding a few key concepts, you may be able to avoid making costly financial mistakes.

1. CDC.gov, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Qualifying For Medicare Under Age 65

Qualifying For Medicare Under Age 65

You might qualify for Medicare if you’re under 65-years-old. This article will explain the conditions where you may qualify for Medicare early.

Insuring Your Second Home

Insuring Your Second Home

There are unique risks of owning a second home and obtaining the proper coverage may protect you from financial risk.

The Latte Lie and Other Myths

The Latte Lie and Other Myths

Check out this video to begin separating fact from fiction.

 

Have A Question About This Topic?







Thank you! Oops!

Trends in Charitable Giving

Some people may want a more advanced gifting strategy that can maximize their gift and generate potential tax benefits.

Buying Auto Insurance For Teen Drivers

Tips on insuring your teen driver.

Protection Against Uninsured Drivers

You’re hit by an uninsured driver. Now what? Are you protected against financial losses?

View all articles

Annuity Comparison

This calculator compares a hypothetical fixed annuity with an account where the interest is taxed each year.

Bi-Weekly Payments

This calculator estimates the savings from paying a mortgage bi-weekly instead of monthly.

Capital Gains Tax Estimator

Use this calculator to estimate your capital gains tax.

View all calculators

Questions to Consider When Buying a Vacation Home

Doing your research is key before buying a vacation home.

Should You Ever Retire?

A growing number of Americans are pushing back the age at which they plan to retire. Or deciding not to retire at all.

Coaches

Coaches have helped you your whole life, in ways big and small. We'd like to be one of them.

View all videos