If you are getting divorced and hiring a lawyer, you should really scrutinize his or her experience with the complicated financial considerations that come along with divorce. Your lawyer may be great at maximizing what you will take away from your divorce, but he or she may not give you good advice on taxes and investment strategy.
Poor financial planning at divorce can bury you financially
One overlooked threat to any divorcing couple’s financial well-being is the U.S. Internal Revenue Service. The IRS, for example, only allows one parent to claim a child as a dependent. A child’s medical expenses may also be deductible, but only by one parent. If you have joint custody you should establish what parent will claim the tax credits. Alimony can also be deducted, but only if they are actually established in a valid divorce agreement. The spouse collecting the alimony must pay tax on it, though. Capital gains taxes must be paid when you sell an asset after it increases in value, and this future tax burden should be accounted for in some way.
Women are in an especially risky situation related to divorce. As Slate explains, women are more likely to earn less than their husband and that plays into retirement calculations. Certainly, whatever spouse makes more will probably save more in a 401k contribution system. Many spouses also receive benefits in pension systems. Social Security calculations, for example, allows a divorced spouse to collect benefits on the ex-spouse’s record, though that benefit can be terminated by getting remarried.
Lawyers help resolve disputes
A lawyer’s expertise is helping you resolve the differences with your spouse so that you can have your marriage legally terminated in the best way possible for you. That may just mean that you want the divorce settled as quickly as possible. You and your spouse may not have complicated assets and you may just want to split what is left in the checking account and move on.
Some couples have very complicated assets that are more complicated to split. The Institute for Divorce Financial Analysts points out they are uniquely suited to help with a divorce. Accountants and lawyers are focused on the present day. They may agree to a split of assets that is relatively fair at present, but a divorce financial advisor can help you realize that a certain settlement is poised to give your ex a huge financial advantage in the future.
Pick a divorce team right for your needs
When you have decided to get divorced you should try to build a team that can meet all of your needs. You should hire a lawyer that can help you meet your goals in divorce, whether that is maximizing your split of the assets or simply ending the dispute as soon as possible. You may want a therapist to help your children cope with the change. All of this is going to be made easier with a divorce financial advisor that can help you plan for a stable future.