Divorce and Your Finances
Divorce is one of the most significant financial events you are likely to experience. Especially if you have been married for a long time, dealing with the distribution of marital assets can force you to reconsider your life plans and reassess your financial future. By working with your New Jersey divorce lawyer, you can help to keep a financial handle on the next stages of planning for your post-divorce future.
Financial Challenges During a Divorce
Many married people build their financial plans around staying together for the future. They plan to experience a joint retirement, share a marital home and create an investment plan for the marriage. However, divorce can force a sharp reconsideration of all of these plans. It is often more expensive to plan for two single futures than one married future, so both parties may need to reconsider their expenses. As a result, it can be important to consult a financial planner along with your family law attorney when beginning the divorce process.
Financial questions and challenges can be part of a divorce for people of all socioeconomic sectors. People who are just starting out may have fewer assets to divide, but they may have many questions about how to handle their finances for the future. Couples divorcing after years of marriage may have substantial marital assets and may develop serious disputes about how those assets are to be divided.
Financial issues are some of the biggest sources of conflict in a divorce. For example, even when estranged parents recognize and respect that each of them needs full involvement with their children’s lives, often for the kids’ own well-being, that generous approach may not extend to financial disputes. If there has been a breach of trust in the relationship, one party may believe that the other is attempting to hide assets from the divorce. Both parties may also experience significant stress about how they will deal with their finances in the future as they need to transition to a new plan. An experienced family lawyer can provide advice about how to deal with an array of concerns that arise, especially throughout negotiations over property division.
By working with a financial planner as well, you can also consider how the decisions you make during the divorce will affect your financial future. You may also need to consider spousal support as either a payer or a recipient, especially if one of you has been a stay-at-home parent. Your divorce attorney will be able to provide recommendations for financial professionals to help you in this regard.
Choosing Your Divorce Strategy
You can pursue several different strategies throughout the divorce process. The right choice depends on your unique circumstances, and you can consult with your family law attorney about the best option for your needs. For example, some couples may go to court to litigate their divorce. Others may be able to pursue options such as mediation or collaborative divorce, or simply focus first on reaching a negotiated solution between both parties and their respective divorce lawyers.
In most cases, going to court and pursuing a full litigation strategy is more costly than the other options, because it requires a stricter schedule for both you and your attorney, and more intense preparations for trial, including preparing witnesses, researching key points of law, and other burdens associated with an adversarial process.
If possible, mediation or collaborative divorce can be preferable options, especially for people who are planning to co-parent. The process can require fewer hours from your divorce attorney and allow for a more flexible schedule; it can also involve less emotional pain and conflict. As a result, it may be good preparation for the parenting issues that will arise in the future. In general, you will want to minimize your legal expenses and court fees during the divorce, and reaching a marital settlement agreement outside of court is one method that helps many people to prepare for their financial future.
Your New Jersey family lawyer can provide you with individualized advice for the divorce options that may work best for you.
Planning Your Financial Future
As part of the divorce process, whether you are going through negotiations, mediation or litigation, you will need to conduct a thorough financial review of your marital life and assets and your projected post-divorce needs. This can be especially important for parents, who need to ensure that they have the funds to care for their children and ensure minimal disruption in their lives. While most people may need to downsize somewhat during and after their divorce, both parents may want to put the children’s expenses first when calculating support obligations.
For example, some kids may have extra medical costs, special needs, tutoring bills, school programs and group trips, as well as future college expenses. Both parents may mandate life insurance as part of their divorce settlement in order to provide greater protection for the children in case of one party’s death.
The financial planning that accompanies divorce does not only cover the first year after the end of the marriage; instead, it can expect to last well into the future. While this may be especially true for couples who will share co-parenting, support obligations and family expenses for many years to come, it can also be the case for people who are divorcing without children, especially when determining how to handle major assets.
Managing Assets During a Divorce
Each divorce is different, but there are certain key assets that can be a major focus of negotiations between the couple and their family law attorneys. One of the most significant is often the marital home. The value of the home may vary greatly; people who just purchased their home and carry a large mortgage may make different choices than people who have shared a marital home for 30 years that is already largely or fully paid off.
New Jersey is an equitable distribution state, and assets do not need to be divided by a judge precisely in half. Instead, they are divided in order to ensure a fair outcome for both parties. In many cases, the marital home may be the most valuable asset owned by both parties. It can also be an emotional concern as well as a financial one. Both parties may need to do serious thinking and negotiations to decide how to handle the home. In some cases, one party may keep the home and relinquish other assets in exchange; in other cases, the home may be refinanced in the name of the person keeping it. In still other cases, it may be the wisest financial decision to sell the home and split the proceeds between the couple.
It is important to consider the long-term carrying costs, tax consequences, and other expenses associated with any marital asset during the divorce. Even items that can be emotionally meaningful can carry significant financial costs.
Others may deal with more complex assets, such as large investment portfolios, restricted stock, cryptocurrency or private equity funds. Business owners with small family firms or large private companies may have unique concerns about how to protect their assets while securing an equitable outcome.
Consult a New Jersey Family Lawyer
Divorce is not only a challenging emotional time; it is also a major period of financial transition. Contact the experienced New Jersey family law attorneys at Lawrence Law by calling us at 908-645-1000 or using our secure online form for a consultation about finances and your divorce at our Watchung or Red Bank, New Jersey, office.