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Staying financially savvy during the divorce process

Rhode Island residents who are seeking a divorce may have heard horror stories of long, drawn-out endeavors costing tens of thousands of dollars. However, not all divorces are the same, and it is possible to end your marriage without breaking the bank.

First of all, to the extent possible you may want to try to settle your divorce out of court rather than go through litigation. There are a variety of ways to reach a divorce settlement: each spouse along with their respective attorneys can enter into negotiations or the parties can settle their divorce through mediation. When settling a divorce out of court, however, it is important to have a thorough understanding of all your assets and liabilities, so the end result of the settlement is fair.

In addition, when dividing assets it is important to keep taxes in mind. Some assets may be taxed as capital gains; some may be subject to income taxes; and some may not have any tax ramifications at all. Also, when divorcing it is important to examine retirement plans and life insurance policies. These items often have a beneficiary named. If your ex is listed as a beneficiary, you may naturally want to change that.

Also, it is important to be financially savvy once the divorce proceedings are complete. Try to avoid emotional spending that could put you into debt, and make sure you understand how to pay the bills you are now responsible for. Doing so can help you cut back on the costs associated with a divorce.  The budget that you will need to prepare for mediation or for court is a great tool to plan the next portion of your life. 

In the end, it is possible to mitigate the costs of a divorce. With the right preparation and attitude, it may be possible to avoid costly litigation. Of course, each divorce is unique, and what works for one person may not work for another. Still, by taking the above steps, you may be able to get through your divorce with your finances intact.

Source: Forbes, "How To Succeed Financially During And After A Divorce," Mark Avallone, Jan. 27, 2017

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