Many Maryland couples undergoing divorce are eager to finalize the process as quickly as possible, often hoping to quicken a potentially lengthy trial, minimize stress and emotional pain, and save money on court costs and legal fees. However, some experts say that rushing through a divorce can actually lead to financial problems in the following months.
One attorney stressed the importance of staying smart about money throughout the divorce process, urging both spouses to exercise particular care during the settlement process. He explained that spending more money on this may seem annoying or inefficient at first, but can actually result in a better financial portfolio once the divorce is completed.
Experts recommend that divorcé(e)s with sizable estates, businesses, or other especially substantial assets or property consult with an accountant or financial professional to ensure they are fighting for a divorce settlement that accurately values their holdings, and is as financially beneficial as possible. One legal expert says that couples are often arguing about what they are dividing, and that it would be worth spending the money to have someone figure out what there is to divide so they would know what they were fighting about.
Those preparing to divorce should be sure to cancel any joint credit or bank accounts they keep with a spouse to prevent them from being abused. Similarly, divorcé(e)s should be sure to transfer their retirement accounts to their own names in a timely manner. Failing to do so until after the divorce can leave them responsible for payments to their ex-spouses.
It is also important to know how child support and alimony payments affect one’s tax returns. A noncustodial parent may be ordered to pay up to 17 percent of his or her income in child support and may not deduct such payments from their taxes. However, any obligations above this threshold are typically considered spousal maintenance and considered deductible; likewise, alimony is taxable income for the receiving party.
Source: Fox Business, “Divorce Attorneys Share their Tips to Avoid Financial Mistakes When Splitting Up,” Kate Rogers, Feb. 19, 2013