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Jan 16

Financial Tips for Women When Getting a Divorce

Divorce can be a necessary pain, but it’s rarely a cheap decision. In fact, nationwide, the average divorce costs between $10,000 and $20,000. Of course, the more complicated or contested your Michigan divorce is, the more it will cost in the end. Michigan is a no-fault divorce state so non-contested proceedings can have you moving on with your life quickly and pretty inexpensively compared to the national average costs. But doing so too quickly without considering your future financial situation can be an expensive and extensive life mistake. Fortunately, there are some simple financial tips for women when getting a divorce.

Hold Out for a Decade Before Divorcing

There are serious legal benefits when staying married for at least ten years. In some states, those include ongoing alimony payment requirements by the spouse with the higher income. But in all states, the benefits of a decade-long marriage include being eligible to collect half of your ex-spouse’s retirement earnings. Personal income and future marital status play a part in the final eligibility. But it’s something worth considering prior to rushing into a Michigan divorce, especially if you’re close to that ten-year mark.

Plan and Budget for the Divorce

Finances for both spouses can change drastically after a divorce. Women tend to walk away with custody of the kids and ownership of the family home. But even potential alimony or child support payments are often nowhere near enough to lift the newly single mother’s income above the poverty line. Approximately 56% of married women leave investment decisions to their spouses, and 61% of those are millennial-aged women. If you had no part in the financial decisions during your marriage, don’t be surprised when there’s nothing to fall back on after the divorce. Planning and budgeting for this fact as well as making some careful investments of your own prior to leaving can help ensure your future and the comfort or security of your kids.

Understand the Ongoing Cost of Your Share of the Marital Assets

A 50-50 split of investments and retirement savings can sound like a great deal and potential future nest egg. But that may end up causing more headaches than it’s worth if your spouse saddles you with all or most of the taxable assets or investments. Discover which ones are taxable, pre-tax, and tax-deferred prior to agreeing to anything in writing. Hiring a competent financial advisor can pay for itself multiple times. And be careful agreeing to exchange future retirement plans or investments for ownership of big assets like real estate or vehicles. Mortgage or loan payments and depreciation can be worth far less in the end than the retirement assets, especially if sales markets plummet.

Remove Your Name from Joint Accounts

You may be listed as a joint account holder for bank accounts, credit cards, loans, and even assets like real estate and vehicles. Prior to signing the final divorce decree, make sure your name is off the accounts your ex intends to continue using or paying on. Don’t assume the divorce gives you legal release from the payment responsibilities because your ex insists they’ll handle the payments. If your ex fails on those promises, the financial responsibilities and resulting reduced credit rating will fall on you. Your divorce attorney can help you confirm which accounts those are, so you and your future finances are as secure as possible after your Michigan divorce.

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