Missourians who are divorcing will have significant emotional issues to get beyond as part of the process. This can obscure other divorce issues that can have even greater long-term effect on their lives. Finances must be considered during divorce proceedings. While this is a persistent problem for people ending their marriage, there are steps to take to mitigate these problems and to be protected. A legal professional can be helpful in organization and being fully prepared.
When a couple divorces, they might have had a home they purchased and shared during the marriage. If one spouse chooses to try and retain the residence, he or she might not realize the costs they will be burdened with on their own. Often, they cannot afford it. Upkeep of a home can be expensive and it might be preferable to sell it and divide the proceeds as part of the divorce. Nevertheless, some people will prefer the home instead of taking liquid assets. This is a trade divorcing couples might see as fair. But, keep in mind that when it comes to a home versus a bank account or retirement account, paper value and liquid value are different and should be compared.
Taxes are also a major factor. An example would be one spouse getting a 401(k) plan and the other spouse getting a bank account. If there is an equal amount in each, the spouse who gets the bank account will likely be better off because there are no penalties for a withdrawal as there are with a 401(k). Another aspect of the 401(k) is the failure to get the qualified domestic relations order (QDRO). This allows a person to take money from the account without having to pay a penalty. Doing so will incur income taxes if there is not a rollover to an individual retirement account within 60 days.
A spouse who receives spousal support should consider a life insurance policy on the ex-spouse who is paying. The paying spouse dying can leave the receiving spouse in trouble once the payments stop and a will or trust has been changed to account for the divorce. These are just some of the financial divorce issues that are problematic if they are not accounted for. As with any other situation related to a divorce, legal help is imperative.
Source: cnbc.com, “When it comes to divorce, not all assets are equal,” Sarah O’ Brien, Sept. 22, 2017