If you and your spouse decide to divorce, you are instantly confronted with a variety of concerns:
- Who will be appointed primary joint managing conservator and who will be appointed possessory conservator (i.e., with whom will the children live and who will have visitation time?)
- How will our marital assets be divided?
- How much will a divorce cost in terms of time and money?
In regard to the last question, there is no definitive answer, as it depends entirely upon your unique circumstances. However, there are certain steps that you can take to alleviate some of the financial (and emotional) costs of a divorce.
Today’s post is the final in a series. Please see “Limiting the Financial and Emotional Costs of a Divorce – I” and “Limiting the Financial and Emotional Costs of a Divorce – II” for more information.)
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Protect your major investments
If you or your former spouse have several retirement accounts – 401(k)s, profit-sharing, pension plans, IRAs – a qualified domestic relations order (QDRO) will more than likely be necessary.
A QDRO grants a former spouse the right to receive either a set number of payments from a certain retirement account or a set percentage of the balance of a certain retirement account. It is typically included in the language of final divorce papers.
Typically, the spouse entitled to the set number of payments or a percentage of the balance rolls it over into an individual retirement account (IRA) tax-free.
It is worth noting that the lack of a proper QDRO can create major tax consequences for the recipient spouse.
Consider consulting with a legal or financial professional to learn more about how a QDRO works.
Build a budget
While you may be eager to get started on your post-divorce life, it is imperative that you take the time to review your new financial situation and build a budget.
Why is building a budget so important?
Building a proper budget allows you to understand what sacrifices need to be made and account for any realities.
For example, if you were ordered to make spousal maintenance or child support payments, a budget may help you understand that you need to give up certain expenditures to which you have become accustomed or get a higher-paying job.
To learn more about divorce or divorce mediation, contact an experienced and skilled legal professional.
This post is for informational purposes only and is not to be construed as legal advice.
Stay tuned for more from our Ft. Worth family law blog …
Related Resources:
- 10 Ways to Avoid Divorce Disaster (Bankrate.com)
