Frequently, people who are going through a divorce will find themselves in unique and challenging situations with regards to divorce financial planning. It is importantly to begin immediately taking steps to protect oneself and one's finances by hiring an attorney; some people will also hire a separate financial planner, but this may not always be necessary. Divorce financial planning will generally begin with the separation of accounts and division of assets, followed by the determination of any monthly payments such as child support or alimony, and eventually reestablishing one's own finances in a secure way.
Anyone getting a divorce should first follow the divorce financial planning advice of his or her attorney. Typically, this will begin with an assessment of the current assets that each individual holds. This may include real estate, retirement or investment accounts, vehicles, furniture and other possessions, or anything that each considers to be an asset. An attorney or mediator will then be able to help the couple determine which assets will go to which person, or if they will be sold and the profits divided. Joint accounts such as checking, savings, or credit card accounts will also need to be reconciled and closed; this will all be part of the divorce settlement, and is necessary for further protection of one's finances after the divorce.
Divorce financial planning will also involve the determination of any payments that need to be made after the divorce is finalized, such as child support or alimony payments. The amount of these payments is determined based on factors such as the income of each individual and the contributions made to joint finances during the marriage, among other factors. If these factors are included in the settlement, one is legally obligated to make these payments for the entire amount of time they are required.
Of course, divorce financial planning also involves budgeting and planning for a different financial situation, where one person will be responsible for paying for everything. This may include making some cutbacks, moving into a smaller place, or finding a different job, for example. Retirement accounts or investments are often hit pretty hard in a divorce, so one may need to begin building up those accounts once again. Again, divorce financial planning should be about protecting oneself as well as dividing up assets and obligations in a fair and equitable way for both parties, based on any additional extenuating factors.
