No matter how amicably a marriage ends, there will be impact on husbands, wives and children. It’s likely, however, each will feel it in different ways. Women going through a divorce, in particular, are often faced with reduced resources. But sensible planning based on understanding might lessen the financial stress that building a different future might trigger.
Florida is a separate property or equitable distribution state. All marital assets and liabilities are equitably divided. This doesn’t mean in half, although that is often the starting point. Rather, it means fairly divided in the discretion of a judge. Non-marital property stays with its owner.
Divorce changes one household budget into two. Usually, two households are more expensive to maintain than one. It’s a good idea to explain this to children, and it will encourage them to be part of money solutions. The financial burden might be felt most during the first year after divorce. Every case is different, but adjusting to new habits around dollars in and dollars out might take time. A spending plan or budget is a valuable tool to get the family on track. An inventory of financial records like bank accounts, insurance and credit card bills is practical. Old financial goals or newly identified needs can be included, even if cash put towards each is less than might have been before the divorce.
It can be helpful to track all spending for a time to identify where adjustments might be needed. Some expenses may relate to the divorce itself, and they will be of limited duration. Tracking also helps families make sound spending choices and lessens impulsive purchasing.
Husbands and wives with joint bank accounts must open separate ones. Changing automatic payroll deposit information is critical. Individual credit protection is very important. Joint credit and bank accounts should be closed during the divorce process. A divorce decree has no legal effect on who is responsible to pay which joint debt. Creditors can go after either or both parties. A divorce decree can order one or the other to pay, but it can be necessary to go back to court if it must be enforced.
Child support is not taxable income, but alimony is. Other property tax burdens may apply. Insurance must be updated. Retirement and estate planning accounts should be reviewed.
Source: University of Florida, “Women and Money: Unique Issues – Finances in a Divorce,” accessed May. 06, 2015