Every year, nearly 1.4 million couples get divorced in the U.S. It’s a process that can have a serious financial impact – on women especially. Studies have shown that a woman’s standard of living can drop as much as 27% during the first twelve months after divorce. It’s a daunting prospect that can be avoided with some advance planning.
Below are five ways to prepare financially for divorce, to ensure that you aren’t without resources in the months ahead.
- Start saving. Once the divorce process starts, the expenses will mount: court costs, attorney fees, relocation expenses, and more. If the children are living with you, you’ll need to be able to support them until your ex-spouse starts contributing. The time to start saving is the minute you contemplate divorce.
- Keep records. Obtain copies of as many financial records as possible before the divorce begins. These records include loan applications, tax returns, credit card statements, deeds to real estate, car registrations, and other documents that prove ownership of both debts and assets. Copies of your spouse’s business records could reveal hidden assets that you can lay claim to.
- Consider tax implications. Divorce has hidden tax costs that you may not be aware of. Decisions such as monthly alimony vs. a lump sum, taking the retirement account or the brokerage plan, and whether or not to sell the house all have tax-related consequences. Hiring an accountant to determine the best course of action to take will be money well spent.
- Fight for what’s yours. You need and deserve certain things to make a new life for yourself and your children. Don’t compromise for the sake of being “nice,” even if you secretly hope for an eventual reconciliation. You are entitled to a share of marital property, so insist on it. Even if you and your spouse do reconcile later on, you’ll be equipped to take care of yourself financially in the interim.
- Develop your career. Women often put their careers on hold to devote themselves to their families. If this applies to you, be proactive once divorce is in the cards. If you had a profession before you took some time off, update your qualifications. You can also attend career counseling sessions at the local employment center. Finding a good job and attaining financial independence will boost your self-esteem and give you control of your future. Give us a call at 503.227.0200 to learn more!