3 Reasons to Pay Attention to Finances During Your Illinois Divorce

 Posted on November 04, 2020 in Divorce Finances

Apart from acknowledging how much will be needed for rent and basic monthly expenses after a divorce, it is all too easy, and common, for divorcing couples to find themselves shelving the financial aspect of the split until after the process is finalized. When you consider the emotional toll of the end of a marriage and additional stressors such as parenting plan arrangements, a potential relocation, and maybe even a new partner for one or both parties, money is often one of the last things couples wish to think about. This can be especially harmful for those who have very limited funds to begin with, or for those who have little to no employment options when the marriage unravels. 

The Importance of a Financial Game Plan

No matter how much or how little money you have to work with, the lack of a financial game plan can result in a divorce that does not turn out in your favor. For example, if you and your spouse were already in serious debt prior to the separation, those debts may only get worse and become more unmanageable if they are ignored. As overwhelmed as you may already be, avoidance is never the answer where your financial well-being is concerned, especially when you are about to experience a significant shift in income and overall lifestyle due to the split.

Why It Pays Off to Address Financial Matters Early On

Whether you have had minimal time to prepare, are currently a stay-at-home parent and do not know where to turn for help, or are simply scared and are avoiding money matters because your mind is on overload, making a plan to address finances early on can help you turn the situation around. Here are three reasons why addressing your finances is important:

• You are going to need credit. Whether you need to acquire a new home loan, apply to rent an apartment, or simply need to get your hands on a small personal loan for an emergency, having credit of your own, apart from shared credit lines you accumulated with your spouse, will be crucial to starting over and getting on your feet. The sooner you begin applying for and building your own credit, the better off you will be once you make the post-divorce transition.

• There will be changes in your taxes. Splitting assets will have certain tax ramifications. For example, some assets will mean high taxable gains, while others will involve a tax-free return of principal. The way you file your returns will also change, which can affect your future refunds and balances with the IRS, yet another reason why it is wise to get your finances organized now, so you do not find yourself sinking just as you are starting to get back on your feet.

• You will need to operate on a whole new budget. This is perhaps the most obvious reason you should not delay tackling your financial needs during a divorce. The moment you make the transition back to single life, you will be living on an entirely different budget, with different income and expense levels than you were previously accustomed to. Financial experts recommend taking inventory of each and every account, collecting your statements, and gathering a clear picture of what your income-to-debt ratio will look like after the split. This will not only help you manage your money after the divorce, but it will also help arm you with the information you need to negotiate a fair settlement or make your case in court.

Contact a St. Charles Family Law Attorney

If you are facing imminent divorce and have concerns about your financial standing, speak with a qualified Kane County divorce lawyer right away to ensure your rights are protected. Call 630-584-4800 to schedule a free, no-obligation consultation and case review at Goostree Law Group today. We will work hard to protect your rights and best interests throughout the divorce process.

Source:

https://www.forbes.com/sites/markavallone/2017/01/27/how-to-succeed-financially-during-and-after-a-divorce/#58f851716ca4