Have you thought about how a divorce will impact your finances?

Whether a divorce is amicable or contentious, one of the main goals for all of the parties involved is usually to ensure that asset division does not become a sticking point in the process. This is especially true in a high asset divorce. Complex asset division is always a possibility in these types of cases, even more so when the divorcing couple did not have a prenuptial agreement.

Many of our Maryland readers may not know that there are many different ways that a divorce can have an adverse effect on a person’s financial situation. High asset divorces can include disputes over retirement plans, business assets, pensions and property interests. However, a recent article highlighted a few other areas that may also see a financial impact.

First, the article mentions legal fees and child support. Both could be new expenditures for a divorced spouse to begin to accommodate into their financial plans. While legal fees may be paid off quickly in some case, child support is often an ongoing, year-after-year commitment that could have result in a serious change in a person’s lifestyle.

Next, the article mentions tax and retirement planning. A single person may be in a different tax bracket than a married couple filing jointly. And, if 401(k)’s or pensions are part of a property division settlement, most people will need to reconfigure their retirement plans. This could include an emphasis on placing more funds in an account on a monthly basis, or even delaying retirement altogether.

Lastly, the article mentions insurance coverage. While the article focuses mostly on long-term insurance and the changes a divorce would bring about, health insurance is another consideration for divorcing couples. This is especially true when the couple has health insurance solely through one spouse’s employer and the other spouse has no coverage options as a single person.

Deciding to file for divorce can be a heartbreaking experience. But, when the decision is made it needs to be accompanied by a good, solid financial plan on how to move forward in the aftermath.

Source: Forbes, “5 Ways Divorce Takes Your Money,” Kenneth Rapoza, March 12, 2013