No couple wants a divorce, but there may be some situations, which require you to make such a difficult decision. Of course, this is not an easy decision, since the couple needs to consider many aspects in advance. For instance, you need to analyze the common financial issues after a divorce. Most often, the stress of managing your life after the divorce comes from financial issues and stress control.
In general, assessment of your financial situation after the divorce includes four aspects, namely assets, income, expenses, and liabilities. When you are still together, you share these four components. But, what happens after the divorce? Here are things to consider.
Important Aspects of Financial issues after a Divorce
These make huge part of financial issues after a divorce. Assets include cash, checking accounts, retirement account, student education account, saving account, deposit, stocks, money-market accounts, bonds, mutual funds, saving bonds, and real estate investment trusts (REITs). Assessing these types of cash can be a source of headache, as they do not have the same tax consequences. You need to consider the tax consequences in dividing them
Cash, saving accounts, and checking accounts are easy to assess, but the case is different for pension accounts. The value is before taxes. It means that you need to pay income tax in any distribution of the income. You need to make an agreement on how the benefits plans are split between you and your spouse. You may agree on a certain percentage of the retirement benefits.
More important is deciding the survivor. If one of you dies, the benefit will come to the specified survivor. Unless you decide it since the beginning, you leave you kids without money. It is true that splitting assets is an exhaustive task. Therefore, hiring a professional financial assessor is a great idea.
This includes you residential house, villas and any other vacation properties like lodge house, rental properties, business property, timeshares, and any other houses. You need a professional help to assess the real estate value. In addition, make sure to agree on who pays the property expenses before the items are sold. These can make a huge spending, but they must be considered in advance. Then, make an agreement on how the real estate will be divided.
Debt payment is one of the crucial financial issues after a divorce. Just because you got a divorce does not mean that you are free of responsible for paying the debt. After the divorce, debts do not part. What does it mean? Divorce decree does not terminate your obligation to pay the debt. Even though your ex-spouse is responsible for the property, you still have some obligation to pay the debt. The creditor does not change the debt terms even though you get a divorce.
However, not all types of debt are treated equal. Credit card debt and bank loan may need to be treated differently. Make sure to keep reading the next article for more details on how to assess your financial issues after a divorce after the divorce.