In addition to being stressful, divorce can also be expensive. Thankfully, there are things you can do to keep costs reasonable and ensure that you remain financially secure when the process is finished. Three such tips are described below.
Know the true value of specific assets, as well as hidden costs
Property division is often a complex aspect of the divorce process because it is difficult to disentangle the financial lives of two people who have been sharing costs and assets for years. As you work with your attorney to decide which assets you want to advocate for in the divorce, remember that even if a particular item is accurately appraised, its value may change over time and it may have hidden costs.
For instance, you need to consider that certain assets worth $500 right now may be worth considerably less if taxes need to be paid on them. Another example is the marital residence. You may be eager to keep the home because you don’t want to disrupt your children’s lives. But even if you can afford the mortgage (and trade other assets for your spouse’s share of the equity), you can’t forget about maintenance, repair and utility costs. When all is said and done, it may make more sense to sell the house and split the proceeds.
Don’t forget about retirement assets
Younger couples tend to forget that they have retirement assets and fail to appreciate just how valuable those assets are. Moreover, you may be entitled to a portion of your spouse’s IRA, 401(k) or pension, even if you are not listed on the plan. Work with your attorney to secure what’s known as a qualified domestic relations order for each retirement account to be split. This order – not the divorce decree – is what will allow you to access those funds when it is time to retire.
Make a budget for now and after divorce
Your household income will change as a result of the divorce. You’ll incur more expenses and have just one income to pay for them. Therefore, you need to budget carefully and plan for the future. In addition to working with your attorney, you may want to consult with a financial professional such as a certified divorce financial planner.
Thankfully, Arizona is not among the top 10 states with the highest average divorce costs. But it is still important to be smart about your approach. To get a better sense of what you’ll need to plan for, please discuss your legal needs with an experienced family law attorney.