How to Handle Finances When You Are Going Through a Divorce
With divorce, comes many responsibilities. In addition to handling child support and custody matters, you must also be prepared to deal with finances. Financial responsibilities during divorce include handling property, cars, stock, 401K, and more. Furthermore, you also need to consider any vacation properties or investments purchased together during the marriage.
If you make smart financial decisions during your divorce, you will be setting yourself up for a stable future.
Consider the tips below on finances when you are going through a divorce:
- Have a clear understanding of what Is taxable. For instance, you should be aware that spousal support is taxable (for any divorces that happen prior to December 31, 2018). For the person that pays the spousal support, they can classify spousal support as a tax deductible. On the other hand, child support is not taxable to the recipient.
- Do not forget about the change in exemptions. For married couples, the exemption for capital gains is higher than it is for single people. When it comes to deciding if you will live in the house for many years or not, it is important to consider the implications. You must realize that capital gain taxes will be much higher if you keep the house short-term.
- Understand the tax implications for retirement accounts. It is best to consult with your accountant or financial advisor and determine the best course of action. Your accountant can help you determine if you should keep your retirement accounts or cash them out. By making more educated decisions regarding your finances, you will have a better financial outcome.
- Realize that there are no guarantees with stocks. Because there is really no way to determine, with accuracy, how a particular stock will perform, it may be best to split them in half and equally divide the stock with your spouse.
- Factor in any outstanding debts: make a list of outstanding debts and determine who will be responsible for paying what.
Do You Have Questions About How to Handle Finances During a Divorce?
This article addresses a small portion of the financial decisions that need to be made in divorce. Schedule a confidential consultation with an attorney today to learn more about your specific situation and receive a comprehensive list of financial items to be discussed and resolved in your divorce. Sabra is an attorney with almost two decades of experience in both real estate law and divorce mediation. Contact the office today at (646) 472-7971 and schedule your appointment.