A divorce is one of the most gut-wrenching phases of your life. A long-standing marriage takes a ton of work. If you and your partner realize that all the effort won’t be worthwhile, getting a divorce could be a wiser move in the long run.
But reaching the other side of the divorce spectrum could involve a long and arduous legal battle. It could get even more complicated if you’re raising children with your spouse. Besides the emotional turmoil, you also have to get used to a new way of life.
Money Matters: Here’s Why
The last thing you want is to face financial difficulties while navigating life after divorce. Keep in mind that you might have to incur significant expenses, including moving to a different city or finding a new house. Also, you’ll no longer have the luxury of splitting household expenses and utility bills with your spouse.
Then there’s the hassle of divvying up all the assets that you jointly accumulated throughout your marriage. For instance, if you’ve bought a home together, you might have to refinance your mortgage to take ownership of the property.
It’ll release your spouse from the mortgage and ensure that you reap the benefits of any appreciation or resale in the future. Refinancing a mortgage is especially crucial when your partner is unreliable and will likely default on their payments in the future.
Besides mortgages and loans, you’ll have to split investments, retirement savings, and other assets.
It emphasizes the importance of sorting out your finances before finalizing the divorce. We’ll discuss a few useful tips to help you get started in the following sections.
1. Get Professional Help
Even the most amicable divorces can take a hostile turn when it comes to finances. Also, it could be difficult for you to be objective about certain assets because you’re emotionally attached to them. But making decisions based on feelings and impulses won’t be ideal for your financial future.
That highlights the importance of professionals who will provide you with an objective point of view. Start by hiring an experienced and trustworthy divorce attorney who will walk you through the process.
If you don’t have a firm understanding of investments and finances, it’s a good idea to hire a financial adviser. They’ll help you identify the best way to divide jointly owned assets, investments, and loans.
2. Focus on Your Mortgage
If you’ve been married long enough, chances are you’ve bought a home with your spouse. One of the biggest dilemmas you’re going to face during your divorce is to decide who gets ownership of the property.
Of course, emotions would dictate that both of you continue to share the mortgage and get equal ownership of the property. But in reality, your spouse’s financial situation may not allow them to repay the mortgage after divorce. Or they might be unwilling to have anything to do with the mortgage.
Your best option is to refinance your mortgage and release your spouse’s name in such situations. Don’t forget to check whether you need to pay any additional charges. Also, make sure you get a quitclaim deed to remove their name from the title.
If you and your spouse can’t afford to pay the mortgage after divorce, it’s wiser to consider selling the property. You can use your share of the money from the resale to repay your mortgage and find a new place to live.
3. Take Stock of Your Assets
Besides real estate, you likely share many other assets with your spouse, including savings and investment accounts, jewelry, art collections, automobiles, etc. Similarly, you might have jointly applied for various loans.
It’s crucial to have a clear understanding of who owns what assets in your relationship. In other words, you have to clarify how much money you have and what assets are in your name.
Get physical copies of bank account statements, tax summaries, brokerage statements, and other financial documents for a detailed overview of your assets. Proper documentation will also make it easier to identify your future financial needs. Similarly, it’ll come in handy while proving your ownership of certain assets.
Getting a divorce is as emotionally exhausting as it is financially draining. You can ease the process by seeking help from a divorce attorney and financial adviser. Work with them to outline a plan to secure your financial future, refinance any mortgages, and find a respectable way to divide jointly owned assets.