Whether you have a divorce that goes to court or you and your spouse can choose a less-contentious process such as a mediated divorce, you likely have a number of financial issues to work through. It may be helpful to use the services of a financial specialist. Just as it’s important to have experienced legal advice regardless of the type of divorce proceedings, sound financial advice can make a significant difference in your life after divorce.
It’s essential to look at the tax implications of the decisions you make involving property and other assets, both in the short- and long-term. You should also consider the ongoing costs associated with keeping an asset.
Of course, the family home is a prime example of this. If you want to keep the home and put it in your name, consider whether you will have the income needed for the mortgage, if there is one, as well as for maintenance, taxes and other ongoing and recurring expenses.
The tax implications of spousal support also need to be considered. It is taxed as income for the person who receives it. However, if an ex-spouse is paying for things like training to help the other spouse prepare to re-enter the workplace or for health insurance until that happens, it may be possible to structure that support to provide a tax savings.
Louisiana has two types of spousal support: interim and final periodic. Interim spousal support is designed to help the spouse with lower income up to six months after the divorce. Final spousal support may be awarded for a longer period if one spouse can afford to pay it and the other needs it as long as the recipient is not determined to be at fault for the divorce.
Pension plans and retirement accounts can be complicated assets to divide to everyone’s satisfaction. It’s helpful when spouses can work together to divide these assets so that both can maximize their tax savings.
It’s often best if these and other financial matters can be worked out by the spouses without having to go to court. Even “traditional” divorces often do not end up in court. Why let a judge make these important decisions that will impact you and your family for years down the line if you and your legal representatives can work them out on your own?
Source: Bradenton Herald, “Divorce and your finances,” Tom Roberts, CFP, March. 24, 2015