Thursday, November 08, 2007
Divorce is a lengthy, difficult process that often leaves both parties in financial distress afterwards. It can often be hard to think about money while dealing with the loss of a personal relationship, but doing so now will make it much easier to move on with your life in the future. One of the worst mistakes that divorced couples make is to drag out the process in hopes of securing more money and cause more pain to the other person. Here are five tips that you can use to make finances an easier part of your divorce:
  1. Consider Selling the House - Many divorced couples try and hang onto the house at all costs so the kids won't be forced to change schools or their weekly routines. However, they fail to consider several other key factors like mortgage payments, upkeep and property taxes - all of which are substantially more difficult when income is cut in half.

  2. Separate All Assets - It is very important to make a clean financial break in order to prevent any future problems. The best way to start is by ordering your credit reports to find out which accounts are in who's name. Also be sure to remove authorized users from credit card accounts, but you may want to do this over time to minimize the impact on your credit score. And finally, transfer your joint accounts to individual accounts.

  3. Don't rely on your Ex - Don't count on your ex making mortgage, alimony or child support payments in order to survive. You should always assume the worst and count any extra as an added bonus for you. Suing is one option, but falling behind on payments because you were counting on them will only hurt your credit scores.

  4. Remeber Taxes - It is important to realize that alimony is taxableto the recipient and deductible by the person making the payment, but child support is not. Therefore, the recipient is better off getting a large amount of child support rather than alimony and having to pay the taxes on the alimony.

  5. Change Your Will - Remember to change your will or else you could be leaving your family to fight a difficult battle. Additionally, life insurance and retirement account beneficiaries should also be changed.