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The Cost of Divorce
Though divorce rates in the United States are declining significantly in recent years, divorce is still a challenge many Americans face during their lives. Aside from the accompanying emotional turbulence, divorce can be a significant financial burden—regardless of who initiates the split. So knowing the cost of divorce, as well as the state of your finances, is very important.
The financial downside of divorce can be substantial. For starters, simply getting a divorce can cost a bundle if you hire a lawyer to represent you. But unfortunately, that’s often an unavoidable cost.
After the marriage is severed, you’re likely to run a separate home and be solely responsible for the mortgage or rent, insurance, utilities, and other expenses. There might be car payments, credit card debt, and other obligations to assume as well, particularly if you have children. You continue to be responsible for any joint debts.
These costs add up to increased financial burdens for you. You may have to adjust your goals to fit your new circumstances.
You may have to adjust your goals to fit your new circumstances.
Getting Financial Help
You might be tempted to economize by not turning to a professional whose fees seem high. But ultimately, good financial advisers, lawyers, and other professionals can save you money by informing you about approaches you might not have been aware of, or providing you with strategies for getting back on a solid financial track once the dust settles.
What You Own, What You Owe
It’s smart to keep track of your finances throughout your marriage. However, if your relationship is coming to a close, it’s important to start putting together your own record of where you and your spouse stand financially. Make sure you have copies of:
- Recent tax returns, wills, and salary statements
- Savings, checking, brokerage, and credit card statements, and any other relevant transactions and status reports
- All insurance policies—such as life, homeowner’s, disability, medical, and car
- Retirement plans or accounts, such as a 401(k), IRA, SEP, Keogh, employment pension, or privately held annuity
- Real estate documents, like ownership and occupancy certificates, mortgages, and home equity loans
- Employment benefit plans—stock options, bonuses, insurance, or guaranteed wage increases
- Appraisals and photos of valuables
It’s also smart to know what pension and Social Security benefits you’re entitled to, which may include a portion of your spouse’s benefits.
The more extensive your knowledge of your financial situation, the better your chances will be of minimizing the cost—both emotional and financial—of your split. And if you know both your own financial status and your spouse’s, you’re more likely to get what you feel you deserve in your divorce settlement.
Dividing Your Assets
State laws determine much of the process of sharing possessions and wealth upon divorce. Some states use the rule of equitable distribution. That means the amount you get in your divorce settlement depends on certain factors, such as your salary when you got married, the length of your marriage, your age and your spouse’s age, and the expenses you might have as a custodial parent. It’s quite common that the more affluent partner gets a larger share of the family assets.
If your home is in a community property state, then the law requires a fifty-fifty split of jointly owned property and of everything either of you earned during the marriage. However, there are often major disputes about what was earned, what is owned, and so on. So keeping records and copies of essential information can be just as valuable to you in a community property state.
Wherever you live, you can save money and headaches by trying to work out your divorce settlement outside of the courts, with a lawyer present to document and record whatever you and your ex decide.
Mediators and Arbitrators
Mediators and arbitrators can also help head off a trip to court. Mediators are facilitators who participate in your negotiations but cannot make decisions. Arbitrators also advise and facilitate, but they are often given the power to enforce a settlement, known as a binding decision, which they may outline themselves.
Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.
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