The previous post discusses three aspects to consider when it comes to dealing with financial issues after a divorce. The discussion begins with how assets and real estate are split between the ex-spouses. Then, another important aspect to agree on is how debts are shared. As discussed before, not all debts are equal.

For instance, credit card debt may not be shared similarly. When assessing the debt, make sure to check the balance on the cards, and then, decide the usage of the funds. If the funds were used for the family interests, then you should share the responsibility to pay the credit card debt. However, spending after the divorce becomes the responsibility of the cardholder.

Furthermore, you may need to discuss how the debts are managed. For instance, both of you may agree to sell certain assets to pay the debt. Then, you will not assume any responsibility to pay monthly bills, except for credit card debts. Besides debts, there is another aspect to consider, namely taxes.

More Financial Issues after a Divorce

Taxes

Make sure that both of you keep a copy of all join tax returns. You need to understand the tax implications when having a negotiation on how the assets are split. If you have joint taxes, then one of you will be paying higher in tax. Therefore, make sure to assess the tax completely. A professional tax assessor may help you.

Child Support vs Spousal Maintenance

You need to understand the difference between child support and alimony (spousal maintenance). Alimony is taxable. If you pay the alimony, you have to pay the tax from your income. However, you will be able to deduct the taxes from the federal income tax at least until 2018. After the 2018 goes, the tax regulation is not the same anymore. Spouse who pays the alimony will not be able to deduct it from the general tax income anymore.

On the other hand, child support is not taxable. Neither the spouse paying the child support nor the spouse receiving it will pay the tax. Some states in the United States have fixed formula to calculate taxes for spousal maintenance. The best way to deal with spousal maintenance tax is to make a negotiation rather than going to the court.

Overcoming Financial Issues after a Divorce

Indeed, there are so many things to take care of after the headache-inducing divorce process. Therefore, hiring a Certified Divorce Financial Analyst (CDFA) can be a good option for you. You may face significant changes in the standard of your living after the divorce. Proper assessment of assets and liabilities helps you anticipate the higher expenses after the process. You may need to pay things, which were once shared with your spouse, alone.

A CDFA helps you review the offer on the table, the potential financial issues after a divorce, and make a projection on your finance in the next 5, 10, or 20 years. He may give you details on your financial needs in the next future and suggest investment options you can make with the assets at your hands.