When the inevitability of divorce suddenly starts looming on the horizon, it can be both challenging and confusing, not just for the woman but also for the man. Although most couples might deny the fact, signs of a marriage breaking can be recognized by both the partners. But most couples either become indifferent or just ignore those warning telltale signs.
These tough times during a rocky marriage, automatically makes the woman the ultimate sufferer, due to her fragility and weakness as dictated by nature. The emotional trauma through which a man passes through is almost always ignored.
Nowadays, with women being highly qualified and competing for the biggest job positions and even some being the breadwinners for their families, understanding finances is no problem for them.
So, when a marriage is transitioning into a divorce, it’s best that not just the woman, but both the spouses should plan their post-divorce period together.
Money is usually the one important thing that couples worry about the most when getting a divorce. To avoid such setbacks by both the spouses, it is best that both should consider pre-divorce financial planning, that will be beneficial for not just the woman but for the man too.
The general areas that must be considered by both the spouses regarding pre-divorce financial planning are as under;
1. Post-divorce settlement budget
Money is always the number one problem when going for a divorce. It is best that both partners, pre-plan how they will tackle their financial agenda.
Foremost for both spouses, they should acquire all their financial information. This will assist in determining the assets and liabilities the couple has individually and collectively.
Next, they should formulate a budget that will determine, how each spouse needs to pay his or her individual debts. Also, how to tackle the collective debts they owe. Will they be able to divide their assets or will their assets be sold off and their proceeds divided between the spouses.
In the case of minor children, their guardianship after the divorce must be discussed and finalized by both the spouses.
Last but not the least, how will both divide the financial liabilities of bringing up their children, their education and ultimately their marriage expenses.
Proper Pre-divorce financial planning, offers the best solution for the couple to formulate a mutual post-divorce budget that will take care of all the aforementioned financial problems.
2. Alimony and child support
As a couple proceeds towards divorce, alimony and child support are two financial burdens that may fall into the lap of either spouse. Usually, in most cases, it is the man who faces these financial payments in favor of the woman.
Alimony is paid from one partner to the other after divorce is finalized.
One who pays alimony can deduct that amount on their tax returns. Whereas, the receiver will have to show that amount as income which is taxable.
Child support is not taxable, but the payer cannot deduct that amount on their tax returns.
Considering these factors, it is in the best financial interest of both partners to plan their financial settlements before the divorce. Mutual consultation with a competent tax advisor can help in planning a solid financial structure before the divorce for both the spouses.
3. Social security and remarriage
Claiming social security benefits is pretty confusing in normal conditions. With divorce finalizing in the near future, it can get complicated for the divorcing couple.
Spouse benefits could be claimed by one partner on his or her divorced partner if they had been married for minimum 10 years or more.
If either partner wants to remarry, that partner will lose the opportunity to claim spouse benefit on his or her divorced partner, as per rule, spouse benefits are limited to one spouse.
Before finalizing the divorce, the couple’s pre-divorce financial planning must consider these factors. They should consult an expert that can guide them regarding spouse benefits and if remarriage is planned by any spouse, then how to tackle its financial setbacks.
4. Investment planning after divorce
Pre-divorce investment planning is just as important for the man as for the woman. How much either partner will get and what their future needs may be will outline either partner’s future planning.
A financial advisor can help solve the investment problems by chalking out a pre-divorce financial plan for both partners according to their needs and goals.
These will be based on their assets and incomes. Mutual pre-divorce financial planning can prevent the unpleasant financial disagreements in the future.
5. Planning and updating the documents
If you wish to distribute your assets according to your wishes after your death, review your beneficiaries on all your legal documents. Also, update any document titles to your individual name especially if they were in joint names previously.
Review and rewrite your will. A will must be included in your pre-divorce financial planning. If you do not have a will, your assets distribution will be determined by the state.