We Got This...

How to account for the financial impact of a divorce

by | Aug 14, 2019 | Divorce

A divorce can have significant financial implications for North Carolina residents. For instance, a person may have trouble maintaining a current lifestyle while living alone. Ending a marriage could also make it harder to retire on time, and this may be especially true for those who are doing so later in life. Ideally, newly single people will create a budget that will account for the expenses that they will need to pay on their own.

These expenses could include the cost of buying or leasing a car or buying or renting a home. Those who are planning on getting divorced or who already are should also consider how they will pay for medical care, groceries and other essentials. It is also a good idea to make a list of any costs that could be incurred during the divorce itself and keep track of them.

Typically, assets are divided equitably in a divorce settlement. Therefore, those who may need extra money could choose to target liquid assets while relinquishing control of the marital home. It is also important to consider the tax treatment of an asset before agreeing to take it. This is because taxes will reduce the overall value of a retirement account or other asset.

In a divorce, a party may be entitled to alimony or other types of financial assistance. An attorney may explain why a person could be entitled to such assistance and the impact that it could have on that person’s finances. Alimony does not count as income to the recipient or reduce the taxable income of the person making the payment. This could influence how much alimony a person receives from a former spouse or influence the overall structure of a settlement.