Divorce has the potential to introduce a number of new stressors to one’s life; a person undergoing divorce may have to deal with asset division, child support, alimony and other issues. These issues can make it hard to adjust to single life, especially in relation to one’s finances. Many Maryland divorcees are not used to financial independence if their ex-spouse handled taxes, bills and budgeting during their marriage, making the prospect of doing so alone seem even more intimidating. Several studies show that women more often lack the experience when dealing with financial matters, which can make them more vulnerable to the effects of divorce.
Experts suggest that individuals going through a divorce contact both an attorney and a financial adviser, especially if they have little financial experience themselves. This can be a crucial step, as waiting too long before seeking financial advice can magnify the effects of mistakes and missed opportunities.
A professional adviser can help one develop an appropriate budget and stick with it, as well as organize one’s finances and make it easier to pay bills, taxes, child support and other similar obligations. A financial adviser can ease the often difficult process of adjusting to a new standard of living following a divorce. Some divorcees may also want to visit an estate planner to learn about amending their wills.
Many financial advisers recommend that divorcees first cancel any jointly held bank or credit card accounts and reestablish them in their own names. Divorcees should also review beneficiary designations on any insurance policies or retirement accounts to ensure their former spouses are no longer listed. Likewise, it is important to understand how divorce affects one’s taxes. For instance, children of divorced parents may choose who claims them as dependents. An ex-spouse who receives alimony must report it as income on a tax return, while the paying spouse may deduct it from their own taxes.
Source: Tucson Citizen, “Financial tips when getting divorce,” Hadley Malcom, Sep. 9, 2012