Divorce will likely result in a significant measure of financial loss for most ordinary people. Contested divorces typically cost more than $20,000 in court costs and legal fees. However, there will be other costs that are indirect that should be considered.
Divorce results in supporting two households, which may be twice as expensive than maintaining one home. In addition, the pool of retirement funds must also be divided, diluting the power of two incomes. Post-divorce insurance plans for home, health, dental, vision, and vehicle will also cost more than family plans, which combine several policies and properties.
Clearly being married and living together is more economical than being apart; a divorce lowers the standard of living for both parties. Fortunately, there are several methods for preparing for the prospect of divorce and mitigating its financial effects as the following will summarize.
A single wealthy person should explore creating Domestic Asset Protection Trust (DAPT) prior to getting married. Having a DAPT will enable a trust creator to be its discretionary beneficiary, along with protecting the assets of the trust from creditors. Unfortunately prenuptial agreements are not ironclad and may subsequently result in legal costs to establish their legitimacy. Unfortunately, it’s too late to create a DAPT if you’ve already said, “I do.” Consult with a lawyer who has experienced in creating DAPTs if you want to protect your assets before getting married.
If you are parent who stays at home, all your efforts, love, and commitment should always be appreciated. However, the time spent on being dedicated to your children may have neglected an important aspect of your life – a professional career that allows you to earn income for living expenses. Family law attorneys often point out that the individual who is financially independent has a decided advantage in divorce over his or her spouse who has been receiving support.
Part 2 will cover several more important ways that will mitigate the financial effects of divorce.
Professional Guidance for Divorcing Individuals
John Faggio, CPA, CFP®, CDFA™, is a Financial Divorce Specialist. Faggio Financial helps divorcing individuals reach an equitable financial settlement in a professional, cost-effective, and expedient manner.
Faggio Financial does this by providing clients with financial clarity to a process that is inherently burdened with emotional issues and the stresses associated with the legal environment in which it exists. Call (410) 988-7333 for professional guidance today.