If you are about to divorce, you may already be aware of the financial impact. The bulk of financial issues can be summarized in four main ways. Read on so that you can be ready to protect your financial interests when you divorce.
1. Property and Debts
Divorcing couples live either in a community property state or an equal distribution state. When it comes to what the couple owns and what the couple owes to creditors, these two models dictate how things are divided. However, it's important for divorcing couples to realize that they can make their own decisions about property and debt – they don't have to have a judge decide for them. If you can do so and the agreement is deemed fair to both parties, it will be approved. It's also important to know what comprises marital property and debts. Only property and debt acquired after the date of the marriage falls into those categories. Left out of the negotiations should be gifts, inheritances, and anything acquired before the marriage.
2. Get Your QDRO In Order
Divorce presents couples with a unique opportunity to remove funds from a 401(K) plan without having to pay the usual penalties for early withdrawal. Retirement funds may be considered marital property, and you must prepare and file a Qualified Domestic Relations Order (QDRO) before the divorce is final. It's expected that any funds be deposited into another qualified retirement account to avoid paying income taxes on the disbursement, however.
3. Protect Your Children
In most cases, child support will be part of your divorce if you have minor-aged children. Usually, it's the higher-earning spouse that is ordered to pay child support to the parent with primary physical custody. The amount ordered depends on the number of children, the state's median income, and the income of both parents.
4. Some Need Spousal Support
While it's not as popular as it was, spousal support (or alimony) may still be ordered for some spouses who can show a need. In many cases, rehabilitative support may be ordered so that the spouse can attain education or job training, and then it comes to an end. Permanent support may be awarded to sick, incapacitated, or older spouses. If you want spousal support, you must ask for it as it is not often automatically included – unlike child support.
You can control some aspects of your divorce when it comes to financial issues. Speak to your divorce lawyer about the above issues to find out more.Share