When North Carolina couples consider ending their unhappy marriages, they may be concerned about the financial ramifications. In fact, divorce can be quite costly, and the effects can linger long after the personal and emotional problems have been resolved. However, by keeping some tips in mind, people can help to avoid making mistakes that could lead to longer-term problems.
After a divorce, people often want to make a new start, and that includes making over their lives and themselves. However, when people start spending after ending a marriage – on clothing, cosmetics, gyms or bars – they could wind up squandering hard-earned assets. This is especially true when people are already dealing with the transition from a dual-income to a single-income household. Often, people will divide investment assets in the divorce. It can be tempting to liquidate some of those investments in order to pay bills, especially when people are struggling to get back on their feet. However, this can lead to unexpected tax burdens as well as a significant hit to financial achievement. It is better to save and consider other ways to reduce bills rather than cashing in large investments.
The same is true for 401(k) funds. In general, these will be distributed with a court order called a qualified domestic relations order. While it may be possible to receive a cash distribution, the recipient would have a harsh tax penalty. Putting those funds into an IRA can help people boost their savings and prevent unexpected high costs.
The financial aspects of a divorce can be some of the most significant parts of the journey. A family law attorney can provide advice and representation to a divorcing spouse in order to achieve a fair settlement on a range of issues, including property division and alimony.