Divorcing spouses should protect their finances by budgeting, downsizing, avoiding needless costs, choosing assets carefully and knowing their legal rights.
Divorce can present a significant financial burden for many people in Leominster. According to The Atlantic, one recent study indicates that over one-quarter of women live in poverty after divorce. Although poverty rates are lower among divorced men, many may still be at risk for this outcome. Furthermore, many divorced adults who live above the poverty line may still face substantial economic challenges.
Fortunately, there are several steps that spouses can take to protect their financial interests during and after this difficult life change. While every situation is unique, the following measures can generally help spouses reduce their risk of experiencing financial hardship post-divorce.
Budget and downsize
Early on, divorcing spouses should make a budget and evaluate whether downsizing will be necessary. Spouses need to realistically assess their expenses and note costs that may increase after the separation, such as rent and insurance. Parents who plan to share joint physical custody may need to budget for buying separate clothing, toys and furniture for their children to use at each residence. The Wall Street Journal also recommends that spouses plan for unexpected costs, particularly if they have kids.
Choose assets strategically
According to the same source, spouses should give careful thought to which property to pursue during the divorce settlement. Before making any binding agreements, spouses should evaluate common hidden costs that can reduce the worth of apparently high-value assets, such as real estate and investments. Examples of these expenses include:
- Tax liability
- Insurance premiums
- Maintenance and upkeep costs
Depending on their financial circumstances, spouses might want to reconsider pursuing property that will carry all of these costs, such as the family home.
Limit legal costs
While it is important for spouses to protect their rights and interests during divorce, prolonged fighting over settlement terms can reduce the assets that are ultimately left to each spouse. The Atlantic states that the average contested divorce is estimated to cost at least $15,000, and highly litigated separations may be even more costly. If feasible, spouses may benefit from exploring alternatives to litigation such as mediation, which has the potential to save time and reduce costs.
Know the laws
Finally, it is important for spouses to understand what they are financially entitled to during a divorce. Under Massachusetts law, each spouse should receive an “equitable and fair” share of the property that the couple owns. Some spouses may also qualify for alimony or spousal support, though this depends on various factors, including the age and health of each spouse, the length of the marriage and each person’s earning capacity.
To ensure that they understand their rights and reach a reasonable resolution, spouses may want to consider working with a divorce attorney during this process. An attorney might be able to help a spouse identify reasonable financial objectives and pursue an advantageous settlement.
