In Texas and across the nation, a divorce can devastate the family finances under the best of circumstances. A separating couple often finds it challenging to set up two households when their income has not changed. However, preparation before the divorce can help make the process go smoothly when the involved parties follow a few steps.
First, individuals should schedule an appointment with a financial adviser before officially divorcing. They should also look at monthly expenses and review tax returns in order to minimize possible surprises. It is also important calculate one’s liabilities and assets; include all debt, credit card bills, lines of credit and home loans. A home equity line of credit or brokerage account should be frozen. It might also be a wise decision to consider any possible future income through stocks, dividends, rentals or a business venture. Any joint accounts should be successfully closed to protect individual credit, and requesting a free annual credit report can ensure that the information listed is correct.
When determining a monthly budget, individuals will need to look at each and every bill and all income that they receive. A divorce settlement will always bring tax ramifications, whether good or bad. Child and spousal support payments can also affect tax bills, and individuals should change beneficiaries on insurance policies if needed.
When a couple ends their marriage, both parties will need to determine a new financial strategy. A family lawyer might be able to help a client draw up a monthly budget in order to help them prepare for divorce.
Source: Wall St. Cheat Sheet, “7 Ways to Manage Your Finances Through a Divorce “, Kirsten Klahn, June 08, 2014