Isn’t Valentine’s Day a day to celebrate love? Well, statistics reflect a contrary report. Apparently, the time immediately before and after Valentine’s sees divorce filings skyrocket by up to 40%. This puts the month of February, ‘the month of love’ in this bracket.
With such worrying statistics, you should not be surprised if you find yourself divorced and heartbroken after Valentine’s Day. Dealing with divorce is not easy; however, the last thing you want is to have a financial heartbreak as well. Here is how to stay safe.
Do Not Mix Money and Emotions
A divorce will throw your emotions into turmoil. However, you need to be able to separate your feelings from real life facts. Most attorneys get paid per hour so don’t use your lawyer as your friend or confidant; use them only for professional reasons to avoid being charged high costs.
Make the divorce process simple and short since nasty divorces end up costing you more. When you make property division decisions, base them on your long term financial interests rather than your emotions.
Find and Avail All Relevant Records and Documents
- Insurance Policies
- Brokerage Statements
- Loan Documents
- Loan Applications
- Tax Returns
- Financial Statements
- Banking Information
- Title Deeds for Real Property
- Credit Card Statements
- Insurance Inventories
- Car Registration
Additionally, Make sure you have documents about your other properties such as gifts and inheritance acquired. The documents will come in handy during property division when it comes down to what belongs to you and what is to be shared. The same applies to records of debts and costs incurred during your time together.
Do Not Overlook Any Assets
The good thing with divorce is that even if you are uninterested and don’t want some assets, they can be used to trade for things you want. Make sure your spouse reveals things like insurance policies, emergency funds, retirement plans, brokerage accounts, and safe deposit boxes during the process.
This will ensure you get a fair share of everything. Your spouse may also have hobbies that have expensive equipment which you can claim as well.
Find Out the Tax Returns on Everything
Naturally, most people will look to get a share of assets which have higher value than their spouse. But not all that glitters is gold. Find out if these assets come with extra tax and management costs.
You might be wondering?
- Should you take lump sums from your joint account or opt for small monthly payments?
- Should you sell your house at the moment, if not who will service the mortgage if you get the house?
- Should you take your retirement plan or the brokerage account?
Find a financial expert to evaluate the tax returns, cost of running a business or assets you own and how much profit they make. You may find out that some asserts have higher tax costs meaning the costs will eat into the profit and their real value may not be enticing.
On the other hand, you may find assets that have low management cost, meaning profits are high and they are more inclined to have greater value in the future, for example, brokerage accounts.
Understand And Prepare For Your Expenses.
Sometimes due to living together, you may fail to understand the real costs of things since they were getting shared between the two of you. After a divorce, you will be required to make changes to cover your monthly bills since the income used to cover them has been divided.
Major costs you will cater for include:
- Legal fees & Court costs. You should get a good attorney and secure a good deal
- Therapist bills. Divorce involves emotional trauma and you may require professional counseling and guidance.
- New living expenses. From now on you will have to fund your own costs of living
Reducing costs will ensure that you don’t rely on your ex and help you avoid financial troubles at the same time. If you have adult children, it may be advisable to reduce the support you give them until you get back a stable financial position.
The Bottom Line
Divorce is an exhausting process. If you are not careful you may find yourself drained both emotionally and financially. However, having a realistic perspective, planning ahead and avoiding emotional decisions may go a long way in ensuring that you don’t add financial breakdown to your heartbreak.