Allard LTD. CPA & Financial Services

(952) 895-0895

Lifestyle Read Time: 3 min

A House Divided

The latest research suggests that divorce rates in the U.S. have been falling in recent decades. Still, many people face the difficult crossroads that comes when their marriage ends.1

Getting a divorce is a painful, emotional process. Don’t be in such a hurry to reach a settlement that you make poor decisions that can have life-long consequences. If divorce is a possibility, here are a few financial ideas that may help you prepare.

The most important task you can do is getting your finances organized. Identify all your assets and make copies of important financial papers, such as deeds, tax returns, and investment records. When it comes to dividing up your assets, consider mediation as a low-cost alternative to litigation. Most states have equitable-distribution laws that require shared assets to be divided 50/50 anyway. When a divorce becomes contentious, attorney’s fees can accumulate.

From a financial perspective, divorce means taking all the income previously used to run one household and stretching it out over two residences, two utility bills, two grocery lists, etc. There are other hidden costs as well, such as counseling for you or your children. Divorces also may require incurring one-time fees, such as a security deposit on a rental property, moving costs, or increased child-care.

Finally, dividing assets may sound simple but it can be quite complex. The forced sale of a home or investment portfolio may have tax consequences. Potential tax liability also can make two seemingly equal assets have varying net values. Additionally, when pulling apart a portfolio, it makes sense to consider how each asset will suit the prospective recipient in terms of risk tolerance and liquidity.

Remember, the information in this article is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

During a divorce, many factors are competing for attention. By understanding a few key concepts, you may be able to avoid making costly financial mistakes.

Average Interest Rate

Chart Source: Familyinequality.com, 2019

1. The Wall Street Journal, 2019

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Budgeting After a Divorce

Budgeting After a Divorce

Divorce is the second most stressful time in a person's life. Here's some tips to get through it.

What Is My Current Net Worth?

What Is My Current Net Worth?

Use this calculator to estimate your net worth by adding up your assets and subtracting your liabilities.

Gap Insurance for Leased Cars

Gap Insurance for Leased Cars

If you’re thinking of leasing a new car, then you shouldn’t forget about gap insurance.

 

Have A Question About This Topic?







Thank you! Oops!

Attract Better Employees with Better Benefits

In a good economy, smart business owners know that a benefits package needs to fan a candidate’s excitement for joining...

Do You Know the Whole Life Story?

Change comes at us from every angle as people update and upgrade everything from their diets to their devices, seemingly every day.

Financial Hacks for Millennials: Student-Debt

Here are seven ways to reduce that debt and live more confidently.

View all articles

Annuity Comparison

This calculator compares a hypothetical fixed annuity with an account where the interest is taxed each year.

Potential Income from an IRA

Estimate your monthly and annual income from various IRA types.

A Look at Systematic Withdrawals

This calculator may help you estimate how long funds may last given regular withdrawals.

View all calculators

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

Protecting Those Who Matter Most

The importance of life insurance, how it works, and how much coverage you need.

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

View all presentations

Coaches

Coaches have helped you your whole life, in ways big and small. We’d like to be one of them.

The Business Cycle

How will you weather the ups and downs of the business cycle?

Retiring the 4% Rule

A portfolio created with your long-term objectives in mind is crucial as you pursue your dream retirement.

View all videos