Deciding whether to divorce is a difficult decision for any couple. Divorce impacts every aspect of each party’s lives, one of the most stressful components being the financial well-being of everyone involved. Being proactive and properly educated can greatly impact the financial outcome of divorce. For people considering dissolving their marriage, having a strong understanding of the following elements is recommended.
What was once a cumulative income between two people will of course be split, often resulting in a decrease both incomes and potentially in lifestyle. Calculating your new income and creating a budget in proportion to that can assist in making sure all expenses are covered. It is recommended that each spouse evaluate their financial needs to ensure that the assets that they are receiving allows needs to be met. Becoming educated on the different types of support available and the duration of that income is also important in making sure that you are prepared for the future. Understanding the terms of the support is vital to ensure a successful financial future after the separation.
Taking inventory of all your assets is a critical step in the preparation process. Creating a worksheet outlining assets and liabilities can act as a helpful guide when starting to negotiate terms. Consider all debt when taking index of your estate and make sure both parties are aware of all outstanding loans. In cases where one party has been more involved in household finances than the other, both spouses may not have complete knowledge. An uninformed party complicates the division of assets and can greatly affect the overall outcome of the divorce.
One of the larger obstacles that couples face is deciding the outcome of the marital home. It is common to find couples in the situation that the marital home cannot be afforded by just one of the spouses upon a split. Couples have choices in this case. Selling the home is always an option. This is only a benefit when the home is able to sell in a reasonable amount of time and enables the couple to pay off their mortgage. Renting out the home is another option that can be a great backup plan if the property is not selling in a timely manner as long as the market rent will support the monthly expenses including a loan if there is one. One spouse may stay in the home, while paying the other party rent as well. Some couples with small children utilize “birdnesting”, a situation in which the couple alternates living in the home and living in a nearby apartment while the children reside in the home. This can create a consistent atmosphere for young children, while still allowing each ex-spouse their own space.
If both names are on the mortgage, the party wishing to receive the home in the divorce will not only have to buy out the half interest of the other in the home, but refinance the existing mortgage so that the spouse who is being bought out of the home has their name remove from liability on the mortgage. A few months ie 120 days may be what is given to the purchasing spouse to refinance the loan, remove the name of the non purchasing loan from the mortgage, and pay the non purchasing spouse the monies due them for at least the interest in the home at the time of the refinance.
As with any legal situation, hiring a lawyer that can guide you through the process is vital. If you are considering dissolving your marriage, gathering advice from your lawyer, laying the appropriate ground work and adequately preparing will be to your benefit. For more information on preparing for divorce, contact Petroni Law Group at 420-4221.