Financial issues divorced spouses must confront
Posted by Thomas Pettinicchi of D'Amico & Pettinicchi, LLC on Jan 18, 2013 in Alimony
While there are emotional and personal issues facing divorced spouses, there are also a myriad of financial issues that arise and which must be resolved. Connecticut spouses getting divorced may be either paying or receiving spousal support, or alimony. The funds available for the individual, however, may be highly influenced by the following expenses.
To begin with, after a divorce, the same amount of income may now have to support two households instead of one, duplicating housing and utility expenses. Health insurance and uncovered medical expenses continue, as do expenses for dental and vision care. One problem following a divorce is that a spouse who was on their husband's or wife's health insurance obtained through an employer cannot remain on the family coverage, requiring that new, and sometimes more expensive, insurance be obtained.
Homeowner and auto insurance policies are also an issue, and the separation into two households may result in the loss of policy premium discounts given for bundling coverage together.
Many couples have funds in various retirement vehicles, including 401(k) funds obtained through an employer. While the non-employee spouse has some vested rights to a portion (usually half) of the value of the account at the time of the divorce, they no longer can share in the employer contributions to the account following a divorce, requiring additional efforts on their part to save for retirement.
After a divorce, each spouse must do their own federal tax returns. A spouse receiving alimony will be taxed on what is received, so they must make provisions to pay that tax by setting aside a portion of the money. A change in status from married filing jointly to single will result in an increase in taxes owed.
Keeping these additional expenses in mind during the divorce process is important. People may not realize these costs can be substantial, so it is important to discuss these finances with an attorney so that an appropriate spousal support agreement can be completed.
Source: The Huffington Post, "Six Unexpected Expenses Divorcees Face," Susan Saper Galamba, Jan. 8, 2013