Divorce is often necessary for someone’s mental health, but they may have to make certain financial sacrifices to end their marriage. The idea of suffering a major financial setback may deter people from filing for divorce.
Those who understand how the end of a marriage could affect their financial health can more accurately evaluate their circumstances to determine whether a divorce is the right option in their case. How might the decision to file for divorce affect someone’s finances?
The loss of assets in property division
The most immediate concern for many people contemplating divorce in Florida is the requirement to divide their assets with their spouse. Florida is an equitable distribution state. Couples can expect that most of their shared property is on the table for the purposes of asset distribution during their divorce proceedings. Someone can potentially protect their separate property, such as assets owned prior to marriage. However, whatever people acquire and earn during the marriage is usually subject to division.
If people cannot reach an amicable settlement with their spouses, then they depend on the courts to divide their property. While a judge must try to do what is fair, not everyone agrees about what is fair when two people divorce.
Income tax changes
There are tax benefits to marriage that people may lose when they divorce. However, both divorced spouses can potentially file their income taxes as heads of household, which can diminish their overall tax obligations to some degree. The federal government has altered prior rules that allowed certain tax benefits for those paying alimony or spousal support. There can also be frustrations related to claiming children as dependents, as only one parent has that option in most divorces.
Changing standards of living
Two people who share household expenses and combine their incomes can typically enjoy a higher overall standard of living. Both spouses may have to accept certain changes to their lifestyle after a divorce. The same income will now need to support two separate households.
Additionally, those divorcing in Florida may need to thoroughly rework their retirement plans. They may have had to split any existing retirement savings with a spouse and might need to make major adjustments to account for those losses. People may need to work for longer or significantly adjust their expectations for retirement because of the financial implications of a divorce.
While divorce does typically mean significant financial changes, most people can minimize those challenges with a bit of advance planning. Understanding the financial implications of a Florida divorce, which may be effectively achieved by seeking personalized legal guidance, can help people to feel more informed and empowered when they decide to file.