Many people are concerned about how divorce may affect their finances as the nation recovers from one of the worst recessions in history.
The good news is people can still emerge from divorce with a clear understanding of their assets and debt obligations.
There are now options available to help people keep down the costs of divorce.
Some people get discouraged because they hear stories of million-dollar divorce settlements and huge child support.
However these cases are not typical.
People most often emerge from divorce without financial devastation. Financial advisors encourage people to prepare for divorce the same way they prepare for any other unexpected major financial expenses, reports the Wall Street Journal.
According to the president of the National Association of Insurance and Financial Advisors, Terry Headley, people should set aside income for several months to save cash in order to cover both spouses' cost in the divorce.
In case of divorce or in case a wedding is called off, spouses can buy either divorce or marriage insurance which provides coverage of such incidents.
Safe Guard Guaranty Corporation sells divorce insurance. It only provides coverage if the couple has been married at least four years. This way it prevents people from buying the insurance when they already know divorce is imminent.
According to the Wall Street Journal, wedding insurance covers expenses when a wedding is canceled or if it is rescheduled due to weather or other problems.
A wedding insurance provides assurance to some people and potentially constrain the monetary consequences of the ends of their marriages.
But a representation of a learned family law attorney and a basic understanding of Texas' divorce laws can help people understand and reduce the financial implications of divorce.
All of the property and income a person acquires while married in Texas is presumed to be the community property of the married couple. This means a judge has the authority to divide this property. This includes contribution to a retirement account, income from a salary and appreciation of a capital asset like a home that occurs during a marriage.
However if a spouse proves by the requisite standard that a certain property is his or her separate property, then the judge has no authority over this property except to confirm ownership to the owner spouse.
Separate property includes property a spouse acquires during the marriage by gift or inheritance, property that a spouse acquired prior to the marriage, property that mutated from a separate property asset or personal injury recoveries other than loss of earning capacity.
Considering the unique circumstances of each spouse, their community property is divided according to what a judge deems just and right, when they get divorced in Texas.
The distribution of community property may not be equal if there is a reasonable basis for doing so. So a spouse's separate property is not divided upon divorce.
Judges consider several factors when making property division decisions according to Texas case law. This includes the education and future employability of the spouses, fault in the breakup of the marriage, the different earning power of the spouses, the joint debt of the spouses, the health of the spouses, the spouse who will have custody of any children, the tax consequences of the marital property division, attorney fees to be paid by each spouse and the needs of the children, if any.
A person should contact an experienced family lawyer for advice on the best approach to divorce and marital property division. The attorney will help you reach the most favorable outcome possible and will zealously advocate for your interests in your divorce.
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Certified Divorce Financial Analyst
Business Valuators / CPAs