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Finalizing Your Divorce: 3 Key Financial Aspects You Need To Understand

Getting a divorce can be a long and painful process, both emotionally and mentally. As you reach the end of it, there are a few financial aspects you need to know to help you prepare to enter the next chapter in your life. Follow this guide for a quick look at three different payments you may need to prepare for after finalizing your divorce. 

1. Alimony

Depending on if you were the financial provider, you may be responsible for your ex-spouse’s financial care in the form of alimony. Simply put, alimony is money that one party provides to the other to ensure financial stability following a divorce. There are a variety of types that affect what you send. If you find yourself asking what is durational alimony or lump-sum alimony, focus on the financial liability and its duration, as this helps determine the type. When it comes to alimony, you must have a clear idea of how much to pay, when you need to pay until and what factors may change the agreement. 

2. Child Support

Going through a divorce with children is already a tricky process. Along with dealing with the emotional upheaval to figuring out who lives where and when, adding finances to the mix can make things more complicated. Typically, judges rule that the father is responsible for any payments. Although, this decision can change depending on the financial situation of the household. Understanding how judges decide can help you get a clearer idea of what amount is required for financial support to ensure your child(ren) maintain their quality of life post-divorce. As you finalize your divorce, check what expenses are included in these payments, such as educational or extracurricular.    

3. Taxes

As Benjamin Franklin so eloquently put it, “in this world nothing can be said to be certain, except death and taxes.” Divorce is no different. Once your divorce is finalized, your tax situation changes. How you file, your deductibles and even alimony payments are part of your post-divorce tax status. As you prepare to file, if you pulled any money from your ex’s retirement plan, check if you qualify for the IRC Section 72. Divorce means that you may have new penalties and new relief available. If you do have children, be sure to clarify who can claim the children as dependents as this will affect what you owe. 

Divorce is hard enough. Take the financial stress out of the equation and get prepared in advance. You will get through this.