Moving On Smoothly

I recently read a good article of “moving on after the storm of divorce” by paying proper attention to post divorce details in order to preserve the settlement agreement. Some suggestions included preparing a post divorce budget, reviewing insurances including life, health, property casualty, and considering taxes.

While I absolutely agree that any of these items can derail an agreement if not duly considered, I disagree that attention to these details should be done post divorce. I personally recommend that all these items be considered while hammering out the agreement.

We all know that the accumulation of data and information pre-divorce can be time consuming, complex and overwhelming. The court requirements generally have us looking backwards to past real estate values, previous investment and retirement account statements, previous tax returns and old budgets. But when you think about it, none of this information will be relevant to either party post divorce. One party will own the real estate and all costs and liabilities attached to it. One party will retain some of the investment and retirement accounts and the other will have the balance. No ones budget will be the same. Many insurance premiums will change, health insurance requiring changes, life insurance now deemed not necessarily needed or adequate, and property casualty insurances that will be the sole responsibility of one or the other. And income taxes certainly change with regard to filing status, sharing of gains, losses and deductions.

For all these reasons I counsel all clients to look at the implications of various settlement considerations from primarily a post divorce view. What their budget is to day is not nearly as important as what it will be post divorce. How will divorce affect their health insurance costs? What will it feel like to pay the property taxes by themselves? What are the additional income taxes and how does that affect my paycheck gong home? All these are vital considerations in understanding if a settlement is even “affordable” to all.

Good divorce counseling should include both legal and financial consulting with the attorney focused on the legal issues and a financial advisor demonstrating alternative settlements as they will impact each party financially. The best settlement is one with no surprises!

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