In the book “Countdown To Financial Freedom,” author Mark Avallone writes that there are three “Ds” in life that can truly devastate your financial plan. They are: divorce, disability and death of a spouse.
If you are going through a divorce right now or think that one may be in your future, then you have probably already considered the negative affects the split could have on your bottom line.
However, you do not have to let a divorce ruin your finances. In an article for Forbes, Mr. Avallone identified steps to take during and after a divorce to keep your financial plan intact, including:
Choose the right divorce lawyer.
We could not agree more than the attorney you choose to represent you during your divorce makes a difference. If you hire a lawyer who is known for drawn-out courtroom battles, then that is the kind of divorce that you will probably have, and you can expect to pay a huge sum of attorney’s fees.
However, if you choose a lawyer who is focused on settlement, then you can expect to move on with your life sooner and at less cost (financially and emotionally).
Understand the tax consequences of property division.
Property division is not as simple as splitting every marital asset in half. That’s because, as Mr. Avallone points out, “all dollars are not equal.”
Instead, some assets will come with hefty capital gains taxes, while others will be subject to income tax or perhaps no tax at all. In order to understand the true value of assets, you have to understand how taxes will apply in the future.
Get ready to adjust your budget, if necessary.
For many people, going through a divorce will require a change in lifestyle, at least to some extent. That’s because one set of household expenses turns into two, so there is less income to go around.
Mr. Avallone explains that it is essential to understand your new budget and to stick with it in order to keep your post-divorce financial plan under control.
There are several additional steps provided in the article, which you can read here. Above all, remember that a divorce does not have to ruin your finances. With careful planning and adjusting — and the right divorce lawyer — you can come out of a divorce with your finances intact.