Financial matters are a primary topic of discussion in divorce mediation. While the matter of how much money you have in the bank is quite simple to figure out, it is often a bit more difficult to sort out the entirety of your combined assets and liabilities. In order to make sure your needs are met, it is important for you to be informed of how your money, belongings, etc., will be split.
Many couples experience tension in their marriage because they disagree on how to divide their finances. Dividing your assets after your marriage is over can often be incredibly taxing and time-consuming. While some couples signed a prenuptial agreement, others may not have created one before they were legally married. In order to expedite the process of splitting up your assets if you do not have a prenuptial agreement, you should consider how you will categorize your monetary possessions. It is necessary to know the value of your combined properties, insurance policies, retirement funds, pensions, etc. before splitting your assets.
You should enter any discussion of your finances with a clear picture of what you want. While it is crucial to remain aware of what is equitable, you should not rule out the possibility of forming an agreement with your former spouse. Perhaps your spouse would like to maintain ownership of a large boat purchased two years, and while the boat is very nice, you do not have the time or energy to take care of it. If you insisted on keeping the shared sports car, you may be able to agree on a trade. Other common examples of trade-offs in a divorce include:
· Pension for funds or other possessions, such as the car or house
· Willingly giving up alimony in return for educational funding
· Heirlooms in exchange for start-up business expenses
It should be noted that the process of dividing your financial assets, etc., is only effective if both parties adhere to full disclosure of financial records. We must have a clear portrait of your finances if a fair agreement is to be crafted.
Knowing what you want is one step, but your decisions may have an effect on your tax liability or settlement. Thus, I encourage couples to work with individual consulting attorneys as needed.
Determining how much you have in terms of assets and liabilities will help you plan your future after the divorce. While you are splitting your settlement, you spend an exorbitant amount of time and money figuring out who gets what in the divorce. But beyond tangible assets, you have a whole set of expenses to account for after you have separated. Once you are no longer sharing assets and expenses with another person, you must consider how you will take care of yourself as well as your children, depending on the parenting plan you have decided upon.
In order to prevent a huge dip into your assets soon after your divorce, figure out your income and expenses post-divorce. Some spouses may receive support in the form of alimony or child support funds; however, if you are not receiving either option—or if you are responsible for providing them—you should create a budget for yourself.
After determining your complete income, figure out your expenses. Post-divorce, you may find yourself solely responsible for your child’s education costs, various types of insurance, housing and associated bills, legal fees, etc. Subtract your assets and income from your expenses to figure out your cash flow. If you end up in the negative, you must reevaluate your expenses or find another source of income.
After your divorce, you will likely have a difficult time filing your income taxes as you will no longer be filing jointly and will have an overhaul of assets and expenses as a result of your settlement. Thus, it is likely a good idea to work with an accountant to make sure your taxes are accurately prepared.
Other potentially impactful factors for your finances include your estate, beneficiary designations, mortgages and bank accounts. Be sure revise who will execute your will and gain control of your assets, as well as who will make decisions for your well-being should you fall extremely ill. Additionally, work with your bank and loan provider to clarify who is responsible for payments or who is allotted what amount of money.