Over the past two decades, overall divorce rates have remained stable (some demographics have even seen a decrease), but "gray divorces" (i.e divorces for people over the age of 50) have doubled. Currently, one in every four divorces is a "gray divorce." For couples more advanced in age, divorces bring changes that may have a particularly substantial impact. Couples that are married for longer build lives that are more intertwined and financially co-dependent. When those financial complexities are forced asunder, it may bring with it a lot of surprises that can impact one’s retirement, health insurance, tax consequences, and more.
Below is a list of points that are important to consider, especially when the emotional fall out can contribute to tunnel vision that may put one at a disadvantage during the negotiations.
Keeping the House: While keeping the house can be motivated by the desire to keep life for your children or grandchildren more stable and comfortable, expenses in upkeep, taxes, and housing market fluctuations can end up becoming a major burden that can take much-needed attention away from your child(ren) and cause financial hardship.
Tax Consequences: In making decisions on spousal support payments, do not forget to consider the tax implications. Importantly, the new tax reform bill includes substantial changes to the taxation of spousal support payments. Knowing what these changes entail is important when trying to gain an understanding of how your budget will be impacted by the divorce.
Debt: You should get a full credit report. It is important to know what debt you could be liable for after the divorce is final. In many cases (especially if the couple has long been on the outs), one spouse has racked up credit debt on a joint account or an account in which a spouse is an authorized user without the other spouse’s knowledge. You do not want it to come as a big surprise when a new credit application is denied.
Knowledge of Assets: Similar as to why it’s important to be aware of the debt that you and your spouse hold, having a clear understanding of what assets you have individually and as a couple is important to ensure you obtain an equitable division. Valuable holdings, insurance policies, retirement accounts, etc., can function as bargaining chips, and if you don’t understand how they work then you’ll be at a disadvantage.
Financial Planning: Along with understanding the debts and assets, it is important to consider the financial impact the divorce may have on your day to day living and your future retirement. It may be wise to avoid large purchases in the months following your divorce in order to gain a handle on the financial reality of your new life. Financial planning can help prevent a lot of unforeseen stresses.
This blog includes just some of the points of interest that should be addressed during a divorce, and an attorney experienced in their knowledge of Virginia divorce laws can help you navigate the procedure carefully and responsibly. If you have any questions about divorce, please contact us.
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