PLAN AHEAD FOR FINANCIAL CONSEQUENCES OF DIVORCE
Over a ten-year period ending in 2009, both the marriage rate and the divorce rate in Illinois have been declining, according to the Illinois Department of Public Health. Divorce, however, remains an event touching the lives of many in the Chicago area, with 32,369 divorces occurring in the state in 2009. Among all the other considerations, finances deserve special attention for anyone going through divorce.
Couples need to take stock of their assets and liabilities, which will have to be divided in the divorce process. Assets include the obvious ones, like a family home, but they may be offset by liabilities, like a mortgage. If any asset is especially important for one spouse or the other to come away with, that has to be taken into account.
Each spouse must draw up a new budget for single life, including not just essential monthly living expenses but also plans for emergency funds and costs that go along with divorce, like attorney fees. Budget planners should look ahead to setting something aside for retirement, too.
As a single person, credit ratings can change. To establish an independent credit history, spouses should close all joint accounts and open new bank and credit card accounts in just one name.
In looking forward to financial planning, it will be necessary to change insurance and retirement account beneficiaries, wills, and other legal provisions that might name the soon-to-be ex-spouse. It is also wise to look into effects that the division of property and income could have on each spouse’s taxes. To protect the interests of children and parents alike, the couple should take a good look at their insurance policies, including car insurance, homeowner’s policies, health care coverage and any other type of insurance they may carry.
A lawyer focusing on family law can be a great help in figuring out all the financial complications that may come along with divorce. An experienced attorney will know how to help streamline the process to reduce the stress that will inevitably be a part of this major transition.