Financial Impact of Divorce
Divorce alters many areas of people’s lives, such as social situations and emotional states. However, when thinking of the changes that divorce brings, people might not consider the place where divorce might have the greatest effect: finance. Those considering divorce should be aware of the ramifications that divorce can have on people’s finances.
When a couple parts ways, they necessarily incur more expenses, since it costs more to maintain two households rather than just one. Bills such as rent, utilities and homeowner’s or renter’s insurance double. People also no longer save on buying groceries in bulk, either.
Additionally, each party is maintaining their household on only one income, when in many cases they used to have dual incomes.
When a couple needs to divide property in a divorce, they may be hit with unexpected taxes. Selling a house or liquidating stocks could result in capital gains taxes. If a party empties a 401(k) or other retirement accounts before they reach age 59 1/2, they could also face penalties for early withdrawal.
Even though the marriage is ending, the financial relationship between the two parties might not be over. If the couple had children, the non-custodial parent will have to pay child support. A spouse who earns more than the other may also need to pay spousal support. These costs can quickly add up to a significant amount of the paying spouse’s income.
Both parties will also be paying attorney fees. The more acrimonious the split, the more legal costs the couple will incur, since the attorneys will have to spend more time on the case if the couple cannot reach agreements on issues such as property division, child custody and support obligations.
Even those who split amicably will have some legal expenses, as they will need assistance drafting property division and child custody agreements and will need to pay court costs and filing fees.
Talk to an Attorney
Divorce can be a huge undertaking, due to all the changes that it brings and the many different ways it affects people’s lives. Facing such an event without legal assistance is unwise. If you are considering divorce, contact a seasoned divorce lawyer who can discuss your situation with you and advise you of your options.