When irreconcilable differences arise between married Michigan couples, one or both may contemplate whether they are at the end of a marriage. Getting a divorce may offer both sides a fresh start and a new beginning. Nevertheless, it is important during any divorce proceeding to have a realistic understanding of how divorce will impact the parties and, if any, children involved.
Alongside the important and emotional issues of child custody and visitation, Michigan residents in the process of divorce should also consider the economic impact of divorce. Besides childcare expenses, tax filing issues, retirement funds and other factors, there will be legal costs involved in a divorce proceeding. Fortunately, for many couples, there are cost-effective and affordable legal options available to arrive amicably at a settlement.
Couples with children should consider the impact on childcare expenses after divorce. With only one income, divorced parents often pay more in childcare if left to shoulder the costs individually. Also, once a divorce is final, each spouse will be filing taxes as a single payer; the change in filing status unfortunately means that a newly divorced spouse is likely to pay more than in the past.
When it comes to retirement planning, when two people are no longer contributing, the expense can increase and the distributions may be lower. Finally, the impact of divorce on any insurance policies should be evaluated. After divorce, it may be necessary to purchase separate policies, and to make sure that beneficiaries on old policies are updated or changed.
When a marriage is not working, divorce can provide the freedom both parties need to restart their lives. However, it is important to understand some of the financial considerations to help make educated decisions during the divorce process and ensure that one re-enters single life in the best possible standing.
Source: Los Angeles Times, “Five ways divorce will impact your finances,” Stuart Pfeifer, March 28, 2013