Individuals going through a divorce often experience a myriad of emotions that can cloud one's ability to think clearly and logically. Within the span of hours or even minutes, an individual going through a divorce may feel angry, sad, resentful, vengeful, anxious, excited and wistful. In the midst of trying to deal with these types of strong emotions, it's easy to lose sight of the big picture, namely one's financial health post divorce.
In recent years, the divorce rate among older U.S. couples has increased dramatically. For these individuals, and all individuals going through a divorce, it's critical to take stock of one's financial situation. Negotiations and concessions made during the divorce process can greatly and dramatically impact an individual's current and future financial health.
To begin this process, individuals are advised to figure out exactly how much and what types of assets they have. In addition to the obvious assets held in a home, property and banking and savings accounts; it's important to include assets held in investment and brokerage accounts as well as in accounts a spouse may be attempting to hide.
It's also important to know the status of one's own retirement accounts as well as those of a spouse. Additionally, some individuals may participate in pension plans the terms of which need to be investigated. Once an individual has taken stock of their assets, it's important to also take stock of existing debts.
Depending on a couple's finances, the process of divvying up marital assets can be complex. For example, it's important to note that different types of assets are valued and taxed differently. Likewise, assets held in retirement accounts are taxed differently and there are strict requirements that must be followed when transferring these assets.
In addition to liquid and illiquid assets, individuals going through a divorce must also take into account matters related to health insurance, estate planning and what to do with a previously shared home. While going through this often confusing process, a divorce attorney can answer questions and provide guidance and assistance to help ensure for one's financial security.
Source: Kiplinger, "Keep an Eye on Finances During a Divorce," Eleanor Laise, June 2014