It may be a common routine for the month of January. People in troubled marriages taking steps to move on from their situations; either by moving out of the family home or serving an unsuspecting spouse with divorce papers. According to numerous reports, the number of divorces spike in the first month of the year.
There are several theories as to why this is (e.g. a financial advantage, making the best of the holidays, etc.). However, when it comes to actually preparing for a divorce, most people considering a change forget about important financial questions that must be answered. We will highlight them here.
Take time to consider a budget – While some divorces resolve themselves quickly, not every proceeding does. Because of this, it is important to consider how you will pay the bills while you are living separately.
Will your tax obligation change? – Keep in mind that if you acquire property as part of a divorce settlement, chances are that you may be liable for capital gains taxes. Essentially, if you receive an asset that has appreciated in value, chances are that you may be responsible for paying taxes on the increased value. With that said, it is important to know what the tax implications will be on acquiring (or losing) property.
Know what’s on your credit report – While checking your credit report is good for the purpose of staving off identity theft, you may discover charges and accounts that you may be unfamiliar with. This may certainly be the case if your spouse has opened joint accounts or credit cards without you knowing it.