Divorce can be a devastating event. No matter who is touched by divorce, the toll can be overwhelming both emotionally and physically. The financial aspects can be devastating, as well, if you do not make sure you have things in order before the event occurs.
There are four questions you should ask yourself before and during a divorce to create as favorable of a financial situation as possible when the dust settles.
What Do We Do with the House?
The home mortgage can be a complicated matter when the family residing in the home experiences a divorce. Since finances and living arrangements will change as a result of the divorce, there are three options a couple has to split up this valuable asset.
Split the equity. The easiest way to split the equity in a home is to sell it and split the proceeds. This is a common option with many divorcing couples, particularly when another option cannot be agreed upon. When the mortgage principal is too high, selling the home is usually the best option.
One spouse buys out the other spouse’s equity. One way to accomplish a buyout is to refinance the home. During closing the selling spouse receives their share of the equity of the home. At this time, the selling spouse can remove their name off the home. It should also be noted that there are several different costs associated with refinancing. These should be taken in consideration when negotiating a divorce settlement.
Maintain the status quo. This option does not sell or refinance the home. One spouse simply moves out of the home and waits until a future date when the home is sold. This is advisable when there are children involved. This is a good option if the children are older, such as in high school. When the children move out, the house can be sold and the equity split at that time.
What are the Laws on Divorce, Child Custody, and Property/Debt Division Laws in Your State?
There are many factors involved in a divorce. Rarely is the actual divorce the only legal matter the separating couple will need to deal with during the divorce process. In most cases there are either children or debt involved. In many cases, there are both.
Each state deals with these matters differently. If you are considering a divorce, make sure you fully understand the laws on the matters that have a direct impact on your divorce (child custody and/or property/debt division) so there are no unexpected surprises at the end.
Two good sources to determine what the laws are in your state are DivorceNet and DivorceSource.
Nebraska is an "equitable distribution" state. This does not mean that property is necessarily divided equally, but rather what is fair in each circumstance. In addition, child support is determined by parental income.
What are My Assets and Debts?
One of the more complicated aspects of a divorce is the division of both the assets and the joint debt. It can difficult to know exactly how much you have of each without a thorough examination of each item.
Make a list of all of assets in the marriage. While including large things like the house and cars are relatively easy, you must not overlook some of the seemingly smaller items that can add up. Don’t forget less than obvious things like the contents of a safety deposit box or collector’s memorabilia. These items may add very real value to your overall worth.
Being knowledgeable of exactly what type of debt you and your soon-to-be ex spouse is extremely important. Examining items like your mortgage, credit card debt, car loans, and related information helps create a level playing field for both parties. Nothing would be worse than discovering you are totally responsible for a debt you forgot to disclose during divorce proceedings.
Do I Need a Lawyer?
While many may argue that a divorce lawyer is not a necessity in every divorce, it is hard to deny the benefit they bring during a difficult time. Selecting the lawyer that is right for you is not as difficult as it might sound.
First, select a qualified and experienced divorce lawyer. Also take into consideration what the lawyer will charge. In the end, these fees will only increase the cost of the overall divorce process.
A divorce lawyer is skilled in the laws as it relates to the laws that govern the process and is necessary for that reason. However, they are not vital for ironing out the fine details of the divorce. When issues like custody or unique financial matters are involved in a divorce, mediators often make the process smoother and much cheaper than your divorce lawyer would.
There are a number of rather complicated questions that should be asked and eventually answered if you are considering a divorce. By thoroughly examining all the issues early in the process, you can potentially save everyone involved with your divorce a great deal of frustration during your proceedings and well into the future.
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