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Preparing for the Changes to Come
No one goes into a marriage thinking it will end in divorce, but that this the reality for many married couples. When a couple decides to go their separate ways, there are a lot of changes that need to be made - especially when it comes to finances. If you're going through a divorce, it's important to understand the financial impact that it will have on your life. In this blog post, we will discuss some of the most important financial changes that you need to consider after divorce.
Income, Spending, and Savings
The termination of a marriage not only changes your relationship status but may also have major financial implications. If you were previously relying on your spouse's income, you may now have to find a way to support yourself. This can be a huge adjustment and may require making some lifestyle changes.
Your spending habits will likely change as well. Even if you are still bringing in the same amount of money, you may find that you need to spend more on things like housing and/or childcare. You may also need to start paying for insurance on your own if you didn't before, including but not limited to health or auto insurance. All of these changes can impact your savings goals and leave you feeling financially strained.
If you are going through a divorce, it is important to sit down and assess your financial situation. It’s important to consider the impact of the terms of your divorce so that you can navigate this new chapter in your life.
Child Support and Spousal Support
Child support is generally paid by the non-custodial parent to the custodial parent for the care of the child or children. The amount of child support is calculated in accordance with state guidelines and is based on a number of factors, including but not limited to each parent's respective income, the number of children, and the parenting time schedule.
Spousal support, previously referred to as “alimony,” is often ordered for the sustenance and for the support of one spouse. An award of spousal support may be allowed in real or personal property, or both, or by decreeing a sum of money payable either in gross or by installments, from future income or otherwise, as the court considers equitable. The amount and duration of spousal support are typically decided on a case-by-case basis, and take into consideration a number of factors, including but not limited to the relative earning abilities of each party, the extent of education of each party, the age and the physical, mental, and emotional conditions of each party, and the duration of the parties’ marriage.
If you are going through a divorce, it is important to be aware of the potential financial implications. Child support and spousal support can have a significant impact on your finances, so it is imperative that you understand how these payments work and how they may affect you. If you have any questions about child support or spousal support, the attorneys at Laubacher and Company are experienced and can assist you in exploring your options.
Taxes
Following a termination of marriage, parties are generally required to file their taxes in a different manner than that which they did when they were still married. If you were previously filing your tax returns under the designation of “married filing jointly,” you may now be required to file under the status of “single” or “head of household.” As a result, you may experience a higher tax liability than you have in previous years.
Furthermore, during a divorce proceeding you must determine which parent will claim the child(ren) on their tax returns. This can greatly impact the type of exemptions to which a party is entitled. In any event, it is always paramount to discuss this with your accountant or tax preparer to ensure that you are taking advantage of all available deductions and credits.
Insurance
Another main financial change to consider after your divorce is insurance coverage. You and your spouse may have been covering one another under your health insurance policies, but now you will need to obtain your own coverage. You may also need to adjust the named beneficiary in your life insurance policy. If you and your spouse have a minor child(ren) at the time of the termination of marriage, then it is important that you follow the terms of your final decree as to which parent shall cover the child(ren) on their respective health insurance plan.
Get Advice from a Family Law Attorney
If you're considering terminating your marriage, or have already made the decision, it's important to understand the financial changes that may occur. Many people are unaware of the financial impact terminating your marriage can have and may end up struggling financially as a result.
It's prudent to speak with a family law attorney about your specific situation, and what changes you can expect. They will be able to advise you on how to best protect your finances during the process of and following the termination of your marriage. With their help, you can make sure that you're prepared for the financial challenges ahead.
At Laubacher & Co., we understand the many changes that come with divorce and are prepared to help you assess your situation and make the appropriate decisions for your future. Learn more or schedule a consultation by calling us at (440) 336-8687 or by visiting us online.