When divorce is unavoidable, it can often spell financial disaster for one or both partners. Not only are two individuals wrestling with incredible emotional strain during this situation, but they may both need to reach into their savings in order to afford legal counsel, find housing, pay bills, and support children while the details are settled. With so much at stake, it's important to understand the financial steps to prepare for divorce.
Am I eligible for alimony?
Alimony, including maintenance and spousal support, is usually awarded according to several guidelines investigated on a case by case basis. Only a legal expert can help you determine the exact factors that may influence your decision, but the test considers factors including:
- Need (including income, investments, lifestyle, and physical health)
- Ability to pay
- Length of marriage
It will depend on your personal situation and that of your spouse.
How Will We Divide Retirement Plans?
Retirement plans and pensions are considered marital assets and therefore will be fair game for proceedings if you were to go to court. Even if you have an IRA in your name only it is typically considered marital property. Fortunately, it is sometimes possible for one party to keep a retirement plan while offsetting the cost with other assets and thereby avoiding the 10% penalty for early withdrawal (before 59.5 years of age).
Who Will Keep The House?
Houses are valuable assets so dividing them is often contentious business. Often one or both spouses will have deep emotional connections to the structure and will be unwilling to sell, or the custodial parent will argue that they need the house in order to provide shelter and continuity for children.
Even if the house were awarded to you, would you be able to afford the utilities, maintenance, and taxes that come with it? How many other assets is it advisable to part with in order to hold on to the house? And, lastly, what are the current economic and market conditions influencing the value of the property and the feasibility of selling? All of these factor in to who will keep the house.
If I’ve Never Worked, Can I Still Tap Into Social Security?
Possibly. If your spouse has worked and if you have been married at least 10 years, then (divorced or not) you are entitled to one-half of your spouse’s Social Security or your own, whichever is higher. This does not affect your spouse (they still receive 100% of their Social Security payments) and does not need to be negotiated. The laws about Social Security change over time so be sure to check the latest updates on the Social Security website.
What about child support?
This will vary dramatically state-by- state. Consult with your attorney and also the State of Arizona Child Support Guidelines to determine if you're eligible to receive child support.
When will I be able to retire?
Divorce can upend decades of careful saving and planning, and leave divorcees confused and financially shaky. Fortunately, Heritage Financial Strategies is here to help. We work with individuals just like you to straighten out upturned finances and give you reliable estimates and a financial plan to get you back on track so you can save and live in security.
If you're in the Gilbert area, we offer divorce workshops every Second Saturday that includes financial steps to prepare for divorce.
Are you ready to discuss your financial goals with Gilbert, Arizona's Most Successful Dave Ramsey Smartvestor Pro?
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