In even the friendliest of divorces, unwinding a relationship can be tough. It is not always as simple as parting ways. The couple will still need to catalogue and then decide on how to split their assets and debts. The greater the finances involved, the more work it will likely take to wrap up the process. To simplify the asset division process in a divorce, Illinoisans may want to consider the following post. While this is not a substitute for legal advice, it could prove helpful to those with questions on how to handle property division.
First, rethink your budget. And when doing it, be honest. Post-divorce life will likely cost more. During marriage, people can pool certain costs like housing. After marriage, each person has to pay for their own housing. These newfound expenses can add up.
Second, check your credit scores. Those scores can be very different for each spouse. This is particularly so for "traditional" couples where one spouse was the main breadwinner. In these cases, the non-breadwinner may not have established a strong credit history. To remedy this, that person should start building their credit history.
Third, set up a retirement plan. When doing so, be extra careful about divvying up funds from tax-deferred accounts. These funds should be rolled over into a new qualifying account. Not rolling the fund into the right kind of account can lead to taxes and early-withdrawal penalties.
Fourth, get to know tax rules. In particular, research how going from married to single will affect future tax returns. For parents, the spouse with child custody may be able to file as household head. For others, the change from married to single may put them in a new tax bracket (sometimes a lower one, other times a higher one).
Fifth, think about changing your insurance. For instance, life insurance may make sense for married couples. But it may be a waste of money following a divorce.
These are only some topics to consider when it comes to asset division. By doing your research and seeking the right help, you may be able to ensure that your road to your new life post-divorce is a smooth one.
Source: The Washington Post, "5 ways to keep a divorce from being needlessly expensive," accessed Jan. 6, 2015