Divorce can disrupt your life in many ways, though it is often the right choice for couples who cannot be happy any other way. Even so, it is best to prepare for all the implications that a divorce will have on your finances.
It is relatively easy to understand the typical division of assets that comes during the divorce process. However, you are also likely to experience some common yet unexpected financial issues that can be significantly more complex in nature.
1. Selling the house
After separating from your spouse, it makes sense to sell the old home and downsize to a house more fitting to your new lifestyle. This can be a difficult undertaking on your own, and you must also keep in mind that you should secure a new home before finalizing the sale of your old one. Depending on your financial situation, securing the down payment might be difficult now that you are operating on a single income.
2. Tax implications
The IRS describes various tax effects of divorce that might affect you after the separation. Keep in mind that child support is not a deductible payment and that your health insurance could be subject to change as a result of your new circumstances.
3. Retirement difficulties
Many individuals fail to realize that retirement assets accumulated during marriage are marital property that is subject to division during a divorce. If you have significantly more retirement savings than your ex-spouse, you might get the short end of the stick when it comes to receiving your share of retirement assets.
For many, divorce is a path toward future independence and happiness. Even as you embark on the next phase of your life, though, it is important not to neglect the new financial issues that may arise.