"How can I ensure that we're going to be able to afford to live with the settlement we design in both the long and short term?"

The divorce process is almost over. Your lawyer puts a settlement agreement in front of you. You lift your pen to sign with an uneasy feeling -- will this settlement really work?

Before putting ink to paper, be sure to consider the following:

• Your current income needs. First, look at your expenses. Did you do a realistic budget to figure out how much income you need each month? Did you remember to include payments for replacing your car, appliances, and other large expenses -- and medical insurance for yourself? You can't assess your settlement until you figure out how much you need to live.
• Your children's needs. If your children have special education or medical expenses, remember to provide for it in the settlement -- don't wait to talk about it after the divorce. Include other big-ticket items, such as college and weddings, so you don't have any future surprises.
• The tax implications of your settlement. There may be assets that will be taxable in the future, such as IRAs or low-basis stock -- so you may be able to readjust what you split to avoid an unfair tax burden.
• Retraining. If you have been out of the work force for a while, ask for maintenance payments for a few years while you get back on your feet.
• Your retirement and special needs. How is your health? Can you work until retirement? Will the settlement give you portions of 401(k)s or IRAs that will help you in retirement?

Remember that a divorce involves supporting two households with the income that used to support only one, so be realistic as well as informed.

Linda Forman, CPA of Evanston, IL brings more than 30 years of experience in tax and business issues to a realistic settlement process. She is a board member of The Lilac Tree, a not-for-profit organization for women in the divorce process. She can be reached at (847) 316-1040. View her Divorce Magazine profile.

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