Divorces are often emotionally-charged events. Money may be the last thing on your mind when you are going through the process; however, divorce can have a big impact on your finances.
These tips can help you financially prepare for life after divorce.
1. Consider mediation instead of litigation
Mediation usually costs less and has better compliance rates than litigation. However, if the mediation process does not work, you may have to litigate your case. When deciding whether to choose mediation, weigh the potential benefits versus the likelihood that you will be able to reach an agreement with your spouse.
2. Consider the after-tax value of assets
If you are trying to negotiate a settlement agreement or decide whether to accept a settlement offer, it is important to consider the after-tax value of assets, rather than looking solely at the current value. It is also important to consider the costs associated with maintaining some assets, such as the family home.
3. Update your financial documents
After a divorce, it is important to update your powers of attorney, will, beneficiaries and other estate-planning documents to reflect your new marital status.
4. Create a long-term budget
Before you head to the negotiating table to discuss support payments and asset division, you need to calculate your long-term living expenses and establish a budget. This is particularly true if you will have sole custody of your children.
Disagreements over money are often big contributors to a couple’s decision to divorce. Money can also be a contentious issue in divorce proceedings. These tips can help you ensure you are protecting your financial interests.