8/31/2011 12:03 PM ET|
The best time (financially) to divorce
The end of a marriage is a financial event as well as an emotional one. Here are 5 situations that can reduce -- or intensify -- the financial impact.
Divorce is a long and difficult process, both emotionally and logistically. It can also do financial harm to both parties. While no time is ideal to get a divorce, certain times are better or worse financially. Here are five things that can affect the impact a divorce has on your wallet.
1. Unstable real-estate market
When the real-estate market is soft and a lot of houses are on the market, you can burn through the equity in your home if you have to sell it in a divorce situation. On the other hand, in a hot market, you can capitalize on the value of your house and sell it quickly. The least-expensive solution is to work the divorce settlement so that one spouse gets to stay in the house and the other spouse takes other assets to compensate for his or her share of the equity. This avoids real-estate fees, land-transfer taxes and other costs of selling and moving.
2. Shaky economy
The overall state of the economy can affect the financial blow a divorce can deliver. A divorce can mean one or both spouses may have to rent or buy houses, purchase cars or even change jobs. In a shaky economy, all of these things can be difficult. Credit is harder to obtain, and jobs may be scarce. In a robust economy, all of these necessities may be easier, but large items, such as houses and cars, may be more expensive.
3. Damaged credit score
If you have a bad credit history, a divorce is apt to make it worse. Good credit scores are often needed to rent an apartment, apply for a job or even open a credit card. You may be unable to afford to live the way you were accustomed to living. If the split is amicable, it may be worthwhile to wait several months to a year until you can work on raising your credit score. If you are the spouse with the credit damage, try to negotiate keeping the existing house and car so that you do not have to face creditors in the near future.
4. Having children under 18
Divorce becomes exponentially more complicated when minor children are involved. Custody issues must be worked out, and financial support arrangements need to be put in place. You and your former spouse will have less combined income with which to support the children, as your living costs will no longer be shared. If you have children heading off to college, one benefit of your divorce is that they may be eligible for student loans and grants for which they might otherwise have been ineligible. Many student aid plans consider only the income of the custodial parent when assessing eligibility for financial aid.
5. Receiving an inheritance
State laws vary on how community property must be divided in a divorce. Most, however, do not look forward. That means that future assets or income of either spouse cannot be divided and treated as part of the divorce assets -- although they might change a child-support order. If you inherit money before your divorce is final, it may become part of the marital assets. If, however, you inherit money after your divorce is final, you will likely get to keep it all.
The bottom line
Divorce is rarely financially advantageous to either party. There are times, however, when it can have an even greater impact on your personal economic situation.
This article was reported by Angie Mohr for Investopedia.
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Financially it was hard, after 31 years and two children. Lost him to high school sweetheart of his, I thought I was happily married, but I found a beautiful, sweet, loving man that I never would have found if not for THAT woman. I am "poorer" financially but richer mentally which makes me better off than my ex-husband is now. He is unhappy and brow beaten, I am well taken care of and loved. In this divorce I won!!! Love the feeling, Karma is a good thing.
I wholeheartedly agree with you in theory. However in practice, I would have to disagree. Unfortunately the only person you can control is yourself so you should protect yourself financially. You never truly know what is going through someone's head when they marry and all it takes is one to want out whether you like/want it or not.
Financial protection these days is necessary. You may want to marry for love but the state will not feel your love when divorcing. Some of the laws are outdated and do not keep with the times.
Do you think its fair for one spouse (usually the woman) to receive alimony up until she remarries? what incentive does she have to remarry instead of just shacking up so she can continue to collect $$$. It is not fair for one person to bare the financial burden of an "ex" for what could feel like an infinite amount of time (until death). No one is entitled to support forever because they once married. There should be an expiration date on alimony.
Do you think its fair that one spouse get most of the assets in a divorce even though he/she never worked for it and maybe just married into it?? if it wasn't yours before, it shouldn't be yours after!
Those are just two examples of why divorce is emotionally and financially costly. And one can be dependent on the other. If you feel like you got shafted financially, it will take a toll on your emotional state. Remove that burden and you will only have to deal with the emotional part of losing a spouse.
I am definitely going to have a prenuptial agreement so that we can rid ourselves of the "if" in our heads as a married couple. everything is already laid out in a cool, calm, collected way instead of a battle in divorce making both or one party bitter.
The person you marry is never the person you divorce.
If you need the name of a real ****, contact Mark Jurcorovich, Butte Mt.
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