Divorce, for most couples, is an unexpected event as a whole. Couples need to be prepared for unexpected financial changes and challenges they will face as divorce is the breakup of not only a family unit but the breakup of an economic unit as well. Each spouse needs to look at their finances from both quantitative and qualitative viewpoints to understand what’s important to them. In other words, divorcing couples need to take into account everything from balancing a new budget to maintaining a certain quality of life. Knowing this information will allow them to better assess how they can move forward on their own.
Here’s a short list of financial questions divorcing couples should consider:
•Do they have a “divorce” budget? How will they pay for the professionals they may need to work with?
•Have they thought about how bills /expenses will be paid until a final agreement is reached?
•What will it cost to maintain two households rather than one?
•Have they considered renting rather than purchasing another home?
•Have they reviewed all of their children’s activities and prioritized what they can do and what they can afford?
•Will the stay-at-home spouse need to consider going to work full-time or part-time?
•If there is a business, does the business need to be sold?
•Is there existing debt (mortgage, lines of credit)? Have they thought about how this debt will be managed? Will they need to take on additional debt to fund future payouts?
•How much will the divorce affect retirement plans?
When working with a collaborative team that includes a financial neutral during your divorce, questions like these ones are often raised and then answered. This allows couples to make informed decisions about their financial plans and futures.