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Financial Planning

What is Your Post-Divorce Financial Budget?

Money tends to be one of the biggest concerns in all of our lives and during a divorce, money becomes even more stressful for both parties involved. This is because splitting money between two different households is much less cost effective than just one household. If disregarded, this can result in anything from an insignificant financial loss to a detrimental financial loss. Financial planning is a very important part of the dissolution process to properly alleviate some of the anticipated economic concerns that may arise.

By having an understanding of your financial situation ahead of time, you are helping to avoid significant stressful situations that may arise in the near future. With a firm grasp of your income and spending habits you will be better able to form a proper post-divorce budget. Depending on your divorce settlement agreement, if you are likely to be entitled to a post-divorce settlement, it is helpful to consider the best way to use that money or property. Common considerations include downsizing the marital home, the duty of college expenses, and any additional personal or child-related goal you may have.

What About Your Spouse’s Social Security Benefits?

If you have been married to your spouse for a minimum of ten years, you may potentially be eligible for payments from your spouse’s social security account once you reach retirement age. You will not be entitled to these benefits if you remarry.

If you are considering remarriage and are entitled to an ex-spouse’s retirement benefits, it is in your best interest to discuss this with a divorce attorney. A divorce attorney can review your financial risk of getting remarried and may help you to determine if the benefits from you ex-spouse would be higher. In this case, remarriage may not be advisable from a financial standpoint.

Is Maintenance Considered Income

Properly planning for your financial future can ensure protection in the future. It is important to understand what is considered “taxable income” to the Internal Revenue System (IRS). If you are someone that may be entitled to receiving spousal support, then you are required to report these maintenance payments on your tax forms. In the alternative, if you are someone who is required to pay maintenance, then you are allowed to take your payments as a tax deduction. A knowledgeable divorce attorney can help to avoid financial anarchy later in life.

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