While laws spell out the money matters, there are a few points to watch carefully.
No one prepares for divorce. The divorce rate for people between the ages of 48 and 66 has increased by more than 50 percent since 1992, according to U.S. Census data. Handling the financial aspects of a divorce appropriately helps to reduce some of the emotional toll.
Divorce laws differ in each state, from requirements pertaining to grounds for divorce, waiting periods and residency requirements, as well as decisions about property division and spousal support. Experts advise that couples should talk about personal finances at the beginning of the divorce process and include the following:
- The liquidity of your collective assets. Know which funds are available to you if you need to access cash quickly. Take an inventory of your assets and note which ones are liquid, such as bank accounts, mortgages and tax refunds.
- Retirement accounts. Know about the tax ramifications and early withdrawal penalties associated with retirement accounts, since these may be considered shared assets.
- Your credit history and shared debt. Get a copy of your credit report to identify joint accounts and potential credit issues. It’s usually wise to close all joint accounts prior to your divorce settlement and to open your own separate accounts.
- The specifics of your insurance policy. If your insurance policy is in both names, you should buy your own policy in your name and know whether you are the irrevocable beneficiary of any other policy.
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