It’s no secret that money is one of the leading causes of friction in marriages. But don’t think that a divorce will automatically solve your problems. A divorce can potentially lead to just as many money problems, if not more than you experienced in marriage.
Lifestyle Changes
A huge obstacle course you’ll have to navigate when you divorce is your change in lifestyle. The financial and practical advantages of marriage are undeniable. Your ratio of income to expenses is likely going to tighten. A divorce means that you’ll either need to find a new house, or will now be solely responsible for financially supporting your current house. If you have kids, you may be facing a challenge of how to juggle raising them while also trying to maintain a career. At least for now, you’re likely going it alone as the only adult in the equation. And this is no doubt challenging. However, if you aren’t careful, these changes will only be the beginning of your divorce’s financial pitfalls.
What is The Divorce Decree, and Why Does it Matter?
You may be under the impression that a divorce simply separates you and your spouse and all your finances, and that’s that. Unfortunately, things usually aren’t so easy. Especially if you and your spouse have been married for some time, your lives have become intricately knit together. Both you and your (former) spouse likely have different opinions on how to fairly unravel those ties. You likely both thing that you are entitled to different assets. One or both of you may feel that the other owes support payments, and you may differ on how much those should be, and how long they should last for. The same goes for liabilities and debts. Of course, you’d love to see your ex take responsibility for the mortgage and credit card debt incurred in your marriage (especially if you get to keep the house and the purchases), but he or she likely doesn’t see things the same way.
Enter the divorce decree. Your attorneys will make their case for what they thing you are entitled to, as will your ex’s attorneys. The court then makes the final say, in the form of the divorce decree. The divorce decree is a legally binding agreement between you and your ex and outlines exactly how the divorce will affect the finances between the two. The divorce decree will include any alimony or child support payments. It may include distribution of assets, and who is responsible for which liabilities. In short, this single document can have an out-sized influence on your net worth and your income and expenses for years to come. It is not something to take lightly.
Don’t Overpay (or Underpay) Court Costs and Legal Fees
Because the divorce decree is so important, it is important that you approach it strategically and with expert help. Unless you and your ex are on the best of terms and have a very open and shut case, it is important that you have an attorney to help you navigate this. In many divorces, one party may try to manipulate or trick the other party into giving up more than what is fair and one party emerges crippled and beat while the other comes unscathed. Don’t let this happen to you.
Of course, on the flip side, don’t go out of your way to screw your ex. Divorce can be a bitter affair (sorry for the pun), and sometimes the opposing parties are so determined to ‘stick it’ to their former spouse that they spend an eternity fighting it out over every last piece of furniture and dinnerware. The result is court costs that add up to far more than the value of the items at stake. Also, if you have children, you’ll probably want to still be on speaking terms at least. While it is absolutely important to find good legal council and to not be a push-over, it is also important to be realistic and pragmatic. Recognize what is worth fighting for and what isn’t. And resist the urge to go scorched earth on your former partner. The divorce is what it is. Move on.
Don’t Forget to Separate All Financial Accounts
The divorce decree might just detail the largest of your assets and liabilities. It is important that you follow to the letter what the divorce decree stipulates (and ensure that your ex does likewise). However, it is also important that you do the legwork and ensure that all other accounts also are divided. This includes bank accounts, credit cards, retirement accounts, etc. Either close them entirely, or have ex’s name removed. The last thing you want is your ex still running around as an authorized user on your credit card. You’d like to think that he or she wouldn’t go there, but you know this is the real world.
Keep Your Wits
Divorce is a huge life change and can be extremely emotional. However, considering the massive long term financial implications that a divorce can have, it is absolutely imperative that you keep your wits about you. While you don’t need to be ruthlessly cold and calculating throughout the ordeal, you also should make sure you aren’t getting the shaft in the deal.