An Arizona Attorney Adds Up the Financial Impact of a Divorce
A divorce may be one of the most stressful and devastating events in your life. Not only is it emotionally and mentally draining, it can be costly for two other reasons:
- You may be required to split assets and property with your spouse: According to Arizona law, any assets you have acquired during your marriage are considered marital assets. Additionally, the value of these assets may be impacted by tax implications. Only assets acquired by gift, devise or descent are exempt.
- You may be required to take on some of your spouse’s debt: Any debt accumulated during your marriage is shared debt. This can include a mortgage, tax debt, or debt acquired from purchasing goods and services.
The financial aftermath of a divorce
When filing for divorce, it’s important that you get your financial obligations in order, to avoid making matters worse. Forbes offers some tips on how to prepare yourself for the financial aftermath of a divorce and common mistakes you should avoid. These include:
- Avoid retail shopping: Spending money and racking up your debt is one of the worst things you can during the divorce process, especially if you may end up paying alimony and/or child support.
- Avoid cashing in on investments: It may be tempting to sell off your investments to help curb the financial burden of a divorce, but doing so could end up costing you money when tax season comes around.
- Understand the new tax implications of alimony: Due to the current tax plan, those paying alimony are no longer eligible for a tax break.
- Hands off your 401(k): If you are under the age of 59 and a half, avoid taking money out of your 401(k). While it may seem tempting, you could end up paying taxes in addition to a 10 percent IRS penalty.
- Avoiding holding on to expensive real estate: If you and your spouse owe a mortgage and one party gets to keep the house, the other will get hit with the bill, too. It’s advisable to only hold onto a home that you’ve lived in for many years.
- Avoid quitting your job to get out of paying alimony: Quitting your job out of spite or to avoid paying alimony can end up costing you more money and legal trouble in the long run. Either way, you will be required to comply with your legal and financial obligations.
Consult with an attorney before making any financial decisions
When filing for divorce, these aspects of your marriage and financial well-being must be considered. Before making any financial decisions, it’s critical that you first speak to an experienced divorce lawyer who will review the details regarding your divorce. Helping you get back on your feet may also require looking into qualified domestic relations orders (QDRO), which divvies up the value of retirement plans, pensions, and IRA accounts.
Attorney Brad Crider will help you explore your legal options and help you navigate the divorce process. To learn more, contact us online for a free consultation.