The Gut Wrenching Battle
You have spent nine exhausting months going through the “divorce process.” The attorneys fought over every single issue, but you really didn’t understand much of what was going on.
Accountants and financial experts testified and presented reports in excruciating detail about your financial life, as did your ex-spouse's experts. They understood your financial world better than you did. They compiled their arguments on why you should get this or only that. Your future was determined by others.
What happens now? If you’re paying support, you’re going to have to figure out what your new lifestyle will look like. What can you afford? What no longer makes sense?
New House Arrangements After Divorce
- Can you still afford your current home? (If it was allocated to you)
- Can you afford to refinance the mortgage? (By removing your ex-spouse)
- Is the house upside-down? (For related reading, see: Divorce and Mortgage Payments: What You Need to Know.)
New Retirement Plans
The lawyers had you do a QDRO, a complex agreement that either gives a part of your pension to your ex or gives some of the pension to you.
- Is that something you want to do now, or once you or your ex retires?
New Financial Accounts
What about all those bank accounts, brokerage accounts, IRAs, education accounts and credit card balances? The decree says who gets what, but now you need to get them all transferred and you need to understand the tax liabilities, if any. (For related reading, see: 5 Financial Mistakes to Avoid During a Divorce.)
The spouse who receives spousal maintenance income needs to know if it will be enough to live on. They will have all of the above questions and problems, but with less certainty because they will be reliant on their ex-spouse for the time being.
With that in mind, there are additional questions that need to be addressed:
- Will you have to get a job? Will it pay enough to meet your needs?
- What if your ex gets sick and is unable to provide what is decreed?
- What if you get sick and bills exceed the support you’re receiving?
These questions may not be resolved, but we can all agree the more knowledge you have regarding your finances, the more capable you are to address problems as they arise.
Make the Divorce Meaningful
Performing a lifestyle analysis is a way of projecting a future budget during the divorce, allowing an individual to easily comprehend what post-divorce life will look like. It measures exactly how you will live. It takes into consideration life and income during marriage and adjusts for all the variables that will change post-divorce.
A lifestyle analysis essentially gives the individual a road map to follow. This puts them in a much better position to either accept, decline or modify offers made during divorce proceedings. Individuals already know what works and what doesn’t for future needs.
As in every marriage, there is only so much income and assets to be split and both parties want to maintain what they had. Some of the ugliness of divorce can be removed simply by educating both parties on the most equitable property settlement and support agreement. Using financial models that show the effects on each party can be a huge influencer in any divorce. (For related reading, see: Get Through Divorce With Your Finances Intact.)
As presented offers come in identifying asset allocation and liabilities, various support payments and living expenses, these financial models and projections will allow an individual to see how it all will affect them. All parties' financial lives are projected and tested, thus removing the fear from the battle.
When the Smoke Clears
- An individual budget will be clearly defined
- Living arrangements will be settled
- Accounts will be invested appropriately
- Insurance will be in place
- Estate documents will be set up
The future is defined, neatly packaged and ready for your new life. (For related reading see: How Life Insurance Works in a Divorce.)