Key Financial Issues to Consider When Filing for Divorce
If you and your spouse are considering divorce, you might be worried about your finances. Not knowing what to expect or how to properly plan your finances in the event of divorce can cause unnecessary stress to your life. Sitting down with an experienced family law attorney who can break down these important issues could help reduce everybody’s stress levels.
Which Financial Issues Should Be Considered in the Event of Divorce?
Assets. Financial assets include cash, savings and checking accounts, deposit certificates, stocks, bonds, mutual funds and savings bonds. While discussing divorce, the lower-income earning spouse or non-working spouse might be more concerned about these assets in order to help cover living expenses. It’s also important to know that some assets, such as retirement assets, do not have the same tax consequences.
Property and real estate. This will include your “marital” residence, or where you lived together during marriage, vacation properties, timeshares, rental properties and business real estate. If your house is going to be sold, consider who will pay its expenses until it sells. Also, you will need to determine how the proceeds or debts will be divided.
Debts. Usually, whichever spouse keeps the property will be required to pay the mortgage or debt for that property. However, both spouses will need to pay the debt over time. Credit card debt, however, can be more complicated, so lay out all of these details to your family law attorney for more information.
Taxes. In many cases, one spouse will leave tax return completion up to the other spouse in household labor division. It’s crucial that when negotiating a settlement, you understand the tax implications. If you are filing jointly, then one of you will be filing as single and paying a higher tax rate. If there are any dependent children, the custodial parent will probably benefit from a head of household filing status.
Spousal support and child support. If you receive alimony, or spousal support, you will be taxed on what you receive. The spouse paying alimony will see a reduction on their income and can deduct this amount from their federal income tax. After December 31, 2018, however, the spouse paying alimony will not be able to deduct it from federal income tax, and the spouse receiving alimony will not be required to pay federal income tax. Child support is not taxable to the spouse paying it nor to the spouse receiving it.
If you are considering divorce and you would like more information about you and your spouse’s financial situations, contact the divorce lawyers at Kardos, Rickes & Hand. Call us at 215-968-6602 or fill out our online form.