The Cost of Divorce Marriage does indeed offer a host of pleasantly surprising monetary benefits. While these might be good reasons to really work on your marriage, divorce is even costlier and should give you both more incentives to avoid it as much as possible. If money issues are disintegrating your union, you should try to really work things out because divorce is certainly going to make your finances take a turn for the worse. How come? Divorce results in exorbitant legal fees. When you and your spouse decide that itâ€™s time to call it quits, you should be ready to pay each of your attorneys to handle the legal proceedings. Even if you both decide not to contest the divorce, you can still expect to shell out $1,500 in legal fees. On the average, contested divorce can cost $15,000 and more complex divorces can cost anywhere from $50,000 to $100,000 according to estimates. If your relationship is beyond repair that you are only talking with your ex-spouse through your attorneys, the cost can go up significantly. Even if you do decide not to hire an attorney to keep costs low, you still have to spend money to end the relationship legally. Divorce can result to higher taxes. When a couple decides to split and they have investments in a joint account, they usually end up liquidating and splitting the assets. This might seem like a good idea at this point, especially since one or both would need the funds to start over, but the capital gains tax bill later on can hit you in the face. It becomes worse if the funds were taken from a traditional IRA and both are below 59 Â˝ years old. The 10 percent penalty for early withdrawals also increases the burden you have to pay to the IRS. Divorce means you have to maintain two households. We have mentioned how you can save on certain expenses when you live together. When you head for Splitsville, you both have to find separate houses and pay your bills and expenses on your own. If you have already bought a house or other properties during your marriage, the property laws in your state will determine how these will be divided. The challenge lies in the fact that your income will still be the same but you will be paying all your bills yourself compared to when two incomes were sharing the expenses.
Divorce means dealing with alimony and child support obligations. If one party —usually the disadvantaged spouse— requests for alimony and the judge grants it, this will mean more expenses on that spouse. If there are children, child support will have to be added to that list of ever-expanding financial obligations as well. Now let’s say that you do decide to marry again after the divorce: You will not only have to continue giving your former spouse alimony and child support, you also have to work to provide for your current family. Divorce can lead to poverty. This is one of the lesser-known facts about divorce: That dissolution of the marriage can be detrimental to one or both spouses in the long-term. Studies show that the poverty rate of children living in married couple homes is about 8 percent while those in single-parent households have a poverty rate of 35 percent. When a divorced parent is unable to provide for the needs of his or her children and the spouse becomes remiss in his or her child support obligations, the financial impact on the child can be very devastating. Other related info you might be interested in: • Setting Long-Term Financial Goals • Marriage and Your Financial Compatibility • How Much Does It Take to Raise a Child?
Published on Oct 22, 2013
Published on Oct 22, 2013
Marriage does indeed offer a host of pleasantly surprising monetary benefits. While these might be good reasons to really work on your marri...