The ending of a marriage or a de facto relationship can be one of the most trying, stressful and challenging periods in a person’s life. Managing divorce settlements objectively, practically and wisely is essential to ensure an equitable outcome for both parties. On top of this, you must take the necessary steps to safeguard your financial stability. This article explains six tips for managing your divorce settlements wisely.
1. Seek Legal Help
Dealing with a divorce is never easy. With so many important decisions and much on the line, seeking legal help from an experienced divorce lawyer can make all the difference. Good legal representation can provide invaluable guidance throughout your settlement process and protect your rights and interests in negotiations.
Legal counsel can help ensure you receive a fair distribution of assets while providing professional support through this emotionally challenging time. Furthermore, having an attorney by your side during high net worth divorce settlements, for example, can give you the confidence to take control of the situation and fight for what’s right.
Also, they can assist in making sure your former spouse follows the court rulings made in the judgment. So, seek legal counsel immediately if you’re considering getting a divorce.
2. Understand Your Financial Situation
Another vital step in managing your divorce settlements is understanding your financial situation. Before negotiating any terms, take the time to evaluate your assets, liabilities and income. Compile documentation of all financial information related to you and your spouse’s finances, including bank account statements, tax records, investment portfolios, etc.
Knowing what you have financially will leave you knowing what the court can divide and how they can split your assets between you and your former partner. Besides, understanding your financial situation can help determine what type of spousal support you’re entitled to.
3. Secure Your Credit
Often, many spouses need to secure their credit during a divorce. This can be problematic since the courts also use your credit score to determine loan rates and if you’re approved to rent an apartment or buy a home.
To protect your credit score and avoid potential issues, close any joint accounts you shared with your spouse and open new ones in your name. That way, no one can access the funds without your permission.
Also, it’s a good idea to monitor your credit score by signing up for one of the free credit monitoring services available online. Signing up for these services helps ensure no fraudulent activity occurs during or after the divorce. Doing this also improves your chances of getting approved for a mortgage in the future.
4. Don’t Rush!
While many spouses may wish to do away with the divorce process as quickly as possible, it’s essential to remember that haste makes waste. Don’t rush into a settlement to get it over with. It’s advisable to take your time and think through all of the possible scenarios and outcomes before signing any papers.
While at it, don’t be afraid to ask questions or negotiate terms. Negotiating ensures you’re getting a fair deal. Remember, the entire process can be lengthy, so don’t lose hope if it takes a while to agree.
5. Consider Tax Implications
One crucial element of any divorce settlement is the taxation aspect. How does taxation come into play? How will you be taxed on specific assets or income streams? Will there be any tax implications for spousal support payments?
These are all questions you need to consider. Don’t forget, with the current tax cuts and the jobs act, some things have changed regarding divorce and taxes.
For this reason, seek the advice of a qualified accountant or financial advisor. They can help you determine what kind of deductions and tax credits you qualify for as part of your settlement. A clear picture of your settlement’s potential tax implications means the courts can compensate both parties fairly. This also ensures no one is paying more than their fair share.
6. Don’t Forget To Take Care Of Yourself
The sad part about dealing with divorce is that it can affect your emotional and mental health. Those divorced partners often feel overwhelmed and exhausted from the legal process and all that comes with it. That’s why taking care of yourself during this time is essential by finding ways to manage stress and cope with negative emotions.
Find someone you can talk to, whether a therapist or close friend, who can help make this difficult time more bearable. Furthermore, get enough sleep, eat well and stay active. All these things will help you better manage your divorce settlements wisely.
Divorce is never easy, but it’s possible to come out of it in good shape financially if you know what steps you need to take. Understanding your financial situation, taking care not to rush into anything, considering tax implications and protecting your credit ensure you get the best deal possible from your divorce settlement.
Going through a divorce might be a difficult time for both parties. Still, remember that making informed, wise decisions now can save you both money and stress in the long run.