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The Financial Impact of a Divorce

By Leslie Fineberg on April 13, 2015

One of the key points of discussion during a divorce is money and property division. These issues can become heated quickly. While some couples argue over who retains stock, property and business ownership, others must decide who will carry the burden of their acquired debt. In both cases, the financial impact of the divorce will be substantial and long lasting.

Here are just a handful of financial consequences that may arise from a divorce:

• Child custody and support: During a divorce, it must be determined who will have primary care of the children and whether the primary custodial parent needs financial support. Additionally, there should be an agreement regarding college costs, savings plans, and other future financial concerns for the children.
• Taxes: There are many tax consequences that may arise during a divorce. The division of property may not be taxable, but alimony received in the form of monthly maintenance may be taxed as income. Maintenance payments made by the payor spouse are tax deductible.
• Life insurance: It is common for one spouse to maintain life insurance to guarantee child support and/or maintenance payments.
• Estate planning: After getting a divorce, you will need a new estate plan. You will need a new will, power of attorney, and living will designee. You should also write out your wishes for your children in the event of your death.
• Retirement plans: It is common for a couple to rely on the retirement plan of the spouse who has the best benefits. During a divorce, it may be necessary to balance the retirement plans. In such cases, a court may award one spouse a portion of the other’s retirement plan.

It is important to understand the financial issues you will encounter during a divorce so that you can prepare and plan ahead. Make sure you receive legal guidance throughout the divorce to ensure that your financial future is protected. Contact the reliable legal team at Nottage and Ward, LLP to help you navigate your divorce. The number to call is (312) 332-2915.