Getting a Divorce

Financial matters are often central in divorce discussions. Knowing what to expect before, during and after dissolving your marriage, can help the process.

  1. Potential Direct Financial Impact

    • Divorce attorney fees or mediation costs to handle the division of marital property, alimony, child support and child custody.
    • Real estate fees related to division of properties and/or moving costs to secure new residences
    • Potential refinancing costs if granted primary residence to remove your ex-spouses name from mortgage.
    • Any consultation fees for any financial matters related to the division of assets or post-divorce updates to budget and financial plan.
    • Potential costs associated with appraisals on real estate or valuing a business.
    • Filing fee associated with the Petition for Dissolution of Marriage.
    • Alimony and/or child support payments resulting from the divorce.
    • Immediate and ongoing expenses associated with maintaining two separate households.
    • Costs associated with securing a new life insurance policy if required by the divorce decree.
    • Any tax implications from changing tax-filing status from married filing jointly to married filing separately, head of household, or single.
  2. Potential Secondary Impacts

    • A Qualified Domestic Relations Order (QRDO) is ordered by the court with instructions to divide 401(k) plans or pension plans.
    • Divorce Decree is finalized and requires follow-through on obligations outlined by the court.
    • Lifestyle impact as a result of any decreases in cash flow due to alimony and child support.
    • Account changes related to closing shared lines of credit, closing joint accounts or re-titling them, and updating your beneficiaries to remove your ex-spouses name.
    • Potential therapy needed for you and/or your children.
    • Potential loss of health insurance coverage if policy was under your ex-spouses employer.
  3. Self Completion/Execution Risks

    • Payments for alimony and/or child-support may be lower than if an attorney negotiated the payments on your behalf.
    • Potential difficulty reaching an agreement without lawyers advocating on your behalf.
    • Potential missed opportunity to include commonly forgotten marital assets like equity compensation, pensions, intellectual property and even things like country club memberships or travel reward points.
    • Potential missed opportunity to negotiate for cash or other assets if you do not have a QRDO filed and presented to the plan administrators to confirm the request can be granted as stated in the court document before the divorce is finalized.
    • Not understanding the financial consequences of a settlement like hidden taxes, depreciating assets, and/or a budget that doesn’t withstand inflation.
    • Not considering the future value of assets in addition to the current value when dividing assets.
  4. Situations where expertise adds the most value

    • Tax Adviser
      Consulting a tax adviser any time you have a major life event including getting divorced is advisable to ensure that you’re withholding enough taxes based on your new tax filing status, reducing your taxable income as much as possible using tax advantaged accounts, and maximizing all potential deductions. In divorce, it is also important property divisions from triggering unexpected taxes.
    • Legal Adviser
      Having a divorce attorney advocate and negotiate on your behalf during divorce proceedings can be particularly valuable if you anticipate that you and your soon-to-be ex-spouse will not agree on how to divide marital assets, alimony and child support payments, and/or child custody. An important differentiator between divorce lawyers and mediators is that lawyers give advice and often tell their clients what to do, whereas mediators serve as an unbiased third party that does not make decisions.
    • Financial Adviser
      Working with a financial adviser that specializes in divorce proceedings can be particularly valuable before, during, and after your divorce to ensure that you properly account for commonly overlooked types of marital property and that your QRDO is completed correctly. Your planner can also help you put post-divorce budget and a long-term financial roadmap in place to work toward your financial goals.

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