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Divorce and Dollars

Divorce and Dollars

 

The period before divorce is difficult. You are expected to make rational decisions at a time of emotional turmoil and in a setting that does not lend itself to rational discussion. Most couples experience increased pressures due to separation and pending divorce.

However, the financial decisions you make at divorce will have long-term economic impacts on you, your spouse, and your children. One decision affects another, such as how your property is valued and divided, how debts are paid, who provides child support, and (in some cases) whether one of you provides support payments to your spouse. The decisions may be made by you and your spouse; by you and your spouse with assistance from a mediator, counselor, or the attorneys of husband and wife; or, in a contested divorce, by the judge.

Economic information and an understanding of your financial situation are critical as you make these decisions. It takes time and effort to become familiar with your family financial situation. The goal of the divorce proceedings is to arrive at a settlement that is “just” based on the facts and circumstances of each case. What is just depends on the situation. In some situations, dividing assets and debts equally would be just; in others, an equal division would not be just. What is just in a short-term marriage will differ from what is just in a long-term marriage. In some divorces, decisions you make can be carried out immediately. For example, if the only property to be divided is the bank account, it can be divided at the time of the settlement. Other divorces may involve promises of things you will do in the future: sell property, pay debts, or make payments to your spouse.

These promises need to be in writing. If they are not, enforcing the provisions may be impossible. The written agreement is called a “property agreement,” and it becomes a part of the divorce decree. Do not sign a property settlement agreement you do not understand or one that you feel contains unfair terms.

Do not let emotions result in missed payments, lapsed insurance, or unnecessary additional financial pressures. Develop a temporary income and expense plan to keep up to date with financial obligations and, if possible, avoid incurring additional debt. You and your spouse should keep records of all expenses you’ve paid. If you have no money for current living expenses or if you fear your spouse will sell or dispose of assets, find legal help immediately.

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