Without a doubt, you are experiencing a range of emotions because of your impending divorce. Some days you may wish to stay in bed, watch TV and forget the whole thing. Of course, the longer you have been married, the more difficult it may be to disentangle your life from your spouse's, and this may be especially true when it comes to finances.
If your spouse managed the money during your marriage, the last thing you probably want to do is to try to deal with the financial aspect of your divorce. However, the work and time you put into making sure you get your fair share of assets will pay off in the long run.
Don't settle during your settlement
You may be tempted to accept an offer to keep the family home in exchange for money or other assets. While keeping the house and letting go of liquid assets may seem like a bargain — especially because you will not have to go through the hassle of preparing the house for sale, packing and moving — this may be a mistake.
The house includes taxes, insurance upkeep, utility bills and most likely a mortgage. Unless you are certain you will be able to manage these expenses on your income, you may wish to discuss a better deal. One solution may be to sell the house and divide the profits, then look for more affordable living arrangements.
Taxes, insurance and power
Unpleasant as it is to think about taxes once a year when you do your returns, having to understand and make decisions about tax implications during a divorce can cause stress. The government taxes different kinds of financial accounts in different ways. Your 401(k), for example, incurs taxes when you make withdrawals from it whereas your checking account withdrawals incur no taxes. It is important to consider the complete cost of your accounts, not just the base amount when agreeing to a division of these accounts.
If you expect to depend on alimony or child support from your ex-spouse, you may wish to consider a life insurance policy that will cover that amount if your ex-spouse should die and you lose that income. You would be the owner and beneficiary of the insurance policy.
Diving into the world of finances during a divorce is often a trial by fire, and you may not feel up to the job. However, since your financial security in the next few years after the divorce will hinge on your divorce settlement, you want to make sure you receive the maximum amount possible. Knowledge is power, and arming yourself with information about your finances will certainly give you every opportunity to build a strong future.