The divorce process can take an emotional toll on a family, even if the divorcing couple is getting along. A great deal of this emotional stress stems from financial challenges that come with getting your divorce finalized and moving on with your life as a newly single person. Experts say that you can make things much easier on yourself and your family by avoiding the mistakes many divorcing couples make.
One of the most common mistakes divorcing in Illinois residents make is deciding to keep a house they can no longer afford. If both spouses were working during the marriage, they may have been able to afford the house with two incomes coming in. However, being able to maintain that house on a single income post-divorce while keeping up with all your other financial obligations (e.g. savings, college funds, retirement) may not be a realistic option. Many people make the decision to keep the house post-divorce for sentimental reasons and soon find themselves going broke trying to keep up with all the home-related expenses. It is also important that you create a new budget for the household and come up with a monthly spending plan to help you adjust to life on a single income.
Another common mistake is not considering the tax implications that come with splitting up. If you and your spouse decide to sell the family home and split the proceeds of the sale, you may have to pay a capital gains tax if you live in an area with high-priced real estate. This tax may also come into play if you decide to sell securities during the divorce. Experts say that even if your asset as appreciated, you may still take home less than the sale price thanks to taxes. if you and your spouse are splitting up investments, it is important to consider a variety of financial factors, including your potential prospects for financial growth and financial needs.
Finally, it is important that you make sure that your estate plan has been updated post-divorce. Make sure your beneficiaries are up to date on your will, retirement accounts, and other important estate documents.
Divorce can be difficult, but an experienced family attorney can help you make sure that your finances, as a newly single person, are protected for years to come.