Smart Money: Financial considerations when getting a divorce

When contemplating a divorce, one factor of consideration is how it will significantly change your daily life. Common things to think about very likely include, getting off work and going home to an empty house, trying to figure out and adjust to a shared custodial schedule of the children, and questioning whose side friends are going to take in the divorce. While these are all very significant changes resulting from a divorce, and are valid concerns, there are also very significant financial implications to take into consideration when contemplating a divorce.

Nevada is a community property state, which means that all assets and debts acquired during a marriage belong equally to both parties, provided that the parties did not enter into a prenuptial or postnuptial agreement. While assets and debts acquired during the marriage are considered community property, assets and debts acquired prior to the marriage are generally considered separate property and not subject to division. Upon divorce, the court will make an equitable division of the community assets, which generally means each spouse receives half of the community assets and half of the community debts. This means that as a general rule of thumb, getting a divorce equates to losing at least half of everything you own.

In addition to dividing everything in half, there are a number of expenses that eat into the assets. Contested divorces generate substantial attorney fees which must be paid. Very often real estate must be sold and agents’ commissions paid. If real estate is not sold, it most likely will need to be refinanced into the person’s name that is keeping it, which is not cheap and depending on the interest rates and how much money is required to be pulled out to purchase the other party’s interest, the mortgage payments can skyrocket.

Daniel Judd

 

It is vital to also consider monthly expenses and living situations. More likely than not, when people are getting divorced they live apart. Generally, one spouse will stay in the marital residence and the other will move out. Instead of having dual incomes for one household, the parties will now have two households to support. It is very realistic that people going into a divorce will not have the funds available to pay for all of the expenses associated with two households. This often results in increased credit card debt and a decrease in all parties’ standard of living.

While a divorce is not fun for anyone involved, it is sometimes necessary. It is not an easy road and will cause significant changes to everyone’s lives. Your regular routine will be changed, you will not get to see your children as much and your finances will take a significant hit. Although making the decision to move forward with a divorce is not one to be taken lightly, and during the divorce life will be difficult, there seems to be a general consensus that after the divorce has been complete, life gets better and normality can be reclaimed.

When thinking about getting divorced, it is important to meet with an attorney and find out exactly how you will be impacted. When selecting an attorney it is important to assess how your goals, expectations and personalities align. You are going to be working with that attorney very closely during the divorce process and very likely afterward, so it is important that you select someone that you trust and get along with. The last thing that you need when facing a divorce is to fight with both your soon to be ex-spouse and your attorney. An attorney-client relationship in a divorce is not only a working relationship, but also a personal relationship, your selection of an attorney is an important one.

Daniel Judd is a native Northern Nevadan and has been practicing family law for approximately five years. Judd is a partner at Allison MacKenzie, LTD., in Carson City and where he resides with his wife and two children.