Divorce is not just a major life the parties and if an agreement is change; it also has a significant financial impact on your everyday life, requiring thoughtful planning and careful consideration. Understanding the financial implications of divorce is essential to ensure a fair and equitable settlement for both parties.
Assessing Your Assets and Liabilities
The first step in addressing your finances during a divorce is to take stock of all assets and liabilities. This includes real estate, personal property (including vehicles), bank accounts, investments, retirement accounts, debts and loans. Both spouses are entitled to a fair share of the marital assets, and understanding the full financial picture is crucial for negotiating a comprehensive settlement.
Understanding Property Division
Wisconsin is a Community Property state. This means that marital property is divided equally between the divorcing parties. Note that property such as gifts and inheritances are considered separate, so be careful not to comingle separate assets with joint assets if this is a concern. Property division negotiations occur between reached, the court will sign off on it if it is reasonable and equal for both people.
Managing Maintenance and Child Support
The term maintenance is also known as alimony in Wisconsin. In general, it means giving financial support to a lower-earning spouse. Child support covers the costs of raising children. The amount and duration of these payments depend on factors such as income disparity, length of marriage and the needs of the children. Understanding your obligations
and entitlements is key to ensuring financial stability post-divorce.
Planning for Post-Divorce Finances
Once the divorce is finalized, it is essential to create a new financial plan that reflects your changed circumstances. This includes budgeting for new living expenses, adjusting savings and investment strategies, and updating wills and beneficiaries. Working with a financial planner can help you navigate this transition and set you on the path to financial independence.
Questions to Ask Your Financial Advisor
When navigating the financial complexities of divorce, it is vital to ask your financial advisor the right questions to ensure a comprehensive understanding of your situation. Key questions include:
- How will the division of assets impact my financial future?
- What are the tax implications of each of these asset types?
- How can I best protect myself and continue to work toward my retirement goals?
- What strategies can help in budgeting for post-divorce expenses?
- How should I update my estate plan and beneficiaries?
These questions can guide you in making informed decisions and achieving financial stability during and after the divorce process.
Wealthspire Advisors
10 Terrace Ct., Ste. 103 Madison, WI 53718
Crystal Cox, Senior Vice President, MBA, CDFA®, CFP® | 608-416-4402
crystal.cox@wealthspire.com | wealthspire.com
