Call Today for a FREE Consultation
Toll Free: 800-585-1385
Local: 763-200-5754

How to avoid financial problems in divorce

Divorce can be an emotionally difficult experience. Though most people understand this, they may not be fully prepared for other questions that arise due to divorce. One of the biggest areas of concern is how it might affect finances.

If divorce is something you're considering here in Minnesota, you might worry about how to handle your money. One study says that most people need to increase their income by 30% after a divorce if they want to keep living the way they did before. You want to ensure that you will have everything you need as you embark on this new phase of life. Fortunately, experts have several suggestions about how you can make that happen.

Make a budget

If you've never done this before, it can seem daunting, but experts say it's the first step you need to take. Luckily, there are many apps and computer programs that can make creating a budget very simple. You should consider what amount of alimony or child support you might pay or receive. If you decide to get a job or otherwise change your work circumstances, that factors in as well.

Make changes

After a divorce, you might need to increase or decrease your insurance plan. This goes for insurance of all types, whether for a home, car or your life. Similarly, you may want to look at your benefits package if you have one. If you had insurance through your spouse's job, you'll need to work out a plan for yourself.

At the same time, you should be mindful of all documentation that relates to your finances. You might need to change beneficiaries on your 401(k) or insurance. This is also a good time to review your estate plan and consider your will and any other directives you've put in place.

Make plans

Taxes apply to all of us, and divorce can drastically change what you owe or receive. Alimony can factor into your tax return, and there have been big changes in the last year. If you're the payer, you will no longer be able to deduct the amount from your taxes, but if you are the receiver, you do not have to count it as taxable income. Certain assets will also affect your taxes. You'll want to consider that when determining your divorce agreement.

Divorce will also affect your retirement. Depending on your circumstances, you may decide to work longer before retiring or increasing your contributions. A divorce agreement might split retirement assets, which can make it more difficult for each person to have the life he or she planned for in retirement.

Take action

No matter your financial circumstances, it is important that you know exactly what they look like if you're divorcing. Turning to experts, both financial and legal, is helpful. Your future can be what you make it.

No Comments

Leave a comment
Comment Information

Marvin Law Office, L.L.C.

Firm Location:

Marvin Law Office, L.L.C.
2150 Third Avenue North
Anoka, MN 55303

Toll Free: 800-585-1385
Phone: 763-200-5754
Fax: 763-427-1178
Anoka Law Office Map

Firm Numbers: