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Important financial considerations during and after divorce

On Behalf of | Sep 18, 2019 | Divorce |

Planning a divorce in Illinois requires an exhaustive analysis of marital assets and future finances. Former spouses must identify all assets and debts and wrangle with calculations for child support and sometimes spousal support. Both parties must figure out what their individual incomes and expenses will look like after the divorce and develop new personal budgets. Certified divorce financial analysts help people sort through these details and make decisions about how to divide their marital estate.

Assets encompass cash, bank accounts, investments, various bonds and real estate, and they must be divided in an equitable manner. Handling debts is typically a complicated matter during divorce. A person accepting responsibility for a debt does not alter the terms of the original loan agreement that named both spouses.

Changes in tax status influence the income of people after they end their marriages. Before someone agrees to a settlement, they should get information about their future tax obligations. For example, someone who gets a pre-tax asset like a retirement account in a divorce will likely pay taxes on the amount later. The result could be that the person actually received far less money than the other spouse who took an after-tax asset.

Taxation influences child support and spousal support in different ways. Income taxes do not apply to child support payments, but spousal support involves the taxation of the payer’s money prior to distributing it to a former spouse.

Legal advice often dovetails with financial advice as a person goes through the divorce process. A family law attorney might promote a person’s rights during settlement talks to prevent the unnecessary loss of property. As the terms of the settlement take shape, an attorney might explain the pros and cons of various choices to help someone arrive at a final decision.