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What can a divorce do to finances?

A divorce in Arizona may have financial consequences over and above legal costs. Several of these matters, even though they may appear complex and technical, should be considered as major issues that must be pursued in court or negotiations. Planning should start well before the divorce filing.

Planning might include developing an idea about a spouse's assets once marital property is divided. After this is determined, the spouse should develop a budget based upon these assets, personal property, income and liabilities. This budget could be used as a guide in seeking a property settlement with the former spouse.

A reasonable financial plan should be created to cover this budget and financial goals. Planning should include assuring there are enough assets to cover college expenses, health care and other expected items.

Retirement and old age should receive special attention because a spouse may have diminished income. Liquidating debt should be considered in this budget.

Assets such as retirement plans, pensions and 401(k) plans have specific rules and tax impact. A spouse should consider this when negotiating property division and their future financial needs. There are also tax consequences for a spouse who receives ordinary investment accounts in the settlement and investment are changed.

Couples often divide real estate. However, there are expenses relating to its upkeep. The timing of selling real estate before or after the divorce has various tax consequences.

Children also impact financial planning. A trust may be recommended because the children can receive a parent's assets when they reach 18 if the parent passes away. Inheritance before 18 is unwise because the child still needs supervision and assistance with their finances. Life insurance policies should also be reviewed.

An attorney can help a spouse with this planning early in this process and pursue options that meet financial needs. An experienced lawyer can help seek a fair and reasonable divorce settlement and assure its compliance.

Source: The Martha's Vineyard Times, "Finance 101: Divorce?," John Kageleiry, Aug. 21, 2017

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