Five Important Financial Considerations When Going Through a Birmingham Divorce
Divorce can reduce your household income, impact your credit score, and disrupt your long-term financial plans. A lot of people who are going through a divorce concentrate on the finances surrounding the process including attorney’s fees, alimony, filing costs, and child support costs. They may not consider their overall financial picture. But it is important to prepare for your long-term finances after a divorce. By thinking about what truly matters to your life and working with a divorce lawyer Birmingham, you can avoid financial stress during your divorce. Here are the top considerations to keep in mind:
Your Marital Finances
As you prepare for a divorce, you should learn a lot about your finances. Thus, you should collect different pieces of information, including spending habits, household budgets, assets, and liabilities. By taking care of such information, you can get organized. Remember that divorce involves plenty of paperwork and documentation. Having this information easily accessible ensures that you can meet deadlines, feel prepared, and avoid delays.
In addition, by understanding your marital assets, you and your lawyer can develop the best legal strategy for your case. Also, you can make informed decisions regarding the divorce procedures and set realistic goals.
Property Value
The value of your property does not only pertain to real estate. Property valuations help you understand your assets. If you own assets such as art collections, real estate, sports memorabilia, vehicles, investment portfolios, business interests, digital assets, household items, intellectual property and royalties, and retirement accounts and pensions, seek a professional valuation. This way, you can understand the worth of these assets and how they can influence your divorce strategy.
Hidden Assets
Divorces involve collecting different information. Indeed, this is the point of the process known as discovery. During this process, you and your spouse need to disclose related financial details to establish a picture of the finances you jointly or individually own. Related financial disclosures can include asset information, income information, tax returns, child-related expenses, and household expenses.
Every party must be to offer any requested documents. But a spouse may not be able to disclose some financial information. For instance, let us say your spouse got a significant tax return and failed to disclose it after you have decided to get a divorce. This could lead to inaccurate net salary disclosure. In turn, this can impact the divorce settlement’s financial aspects like alimony and child support. If you believe your spouse is hiding financial information, talk to your attorney about this. Your attorney may file subpoenas, recommend working with a forensic accountant, or request a court order to help uncover related information.
Tax Implications of Divorce
There are many reasons divorce and taxes can get complicated. By working with a tax expert, you can minimize the stress of determining the tax implications of your divorce. You will need to consider things like your marital status before the tax year ends, any available child-related tax credits, the Head of Household claim for a child, and others.
It is important to plan for taxes and make decisions on asset division. Also, you need to negotiate your divorce settlement strategically and develop a clear financial plan after your divorce.
Expense Planning
In a divorce, a lot of financial decisions depend on historical data. But you should create a plan for your current and future expenses, aside from taxes. Once you and your spouse split a joint income household, maintaining your current standard of living can be hard. In a single-income household, expenses such as utilities, travel, groceries, car insurance, and health insurance can become more expensive than before.
Take note that some costs may not be apparent right away. Both tax implications and moving expenses can sneak up on you. However, even hidden costs and expenses can add up quickly. So, make sure to develop clear financial goals post-divorce.
