Money is an ongoing concern for many and it can often cause problems for marriages, occasionally to the point where it ends in divorce. However, divorce brings with it, money trouble of its own.
There may be a house, a car and even a collection of some kind all of which will have to be divided. This is a big part of the divorce process and the way it works has some relevance to where you live.
There are two forms of states known as community property states and equitable distribution. Community property states see all belongings as being owned by both parties. This does not necessarily mean that everything is split 50:50 and belongings are split in a fair way.
Equitable distribution states indicate that any property obtained during the marriage will belong to the spouse that earned it. In the case of divorce, the two parties have the assistance of solicitors and such to help them divide belongings in a fair way.
Splitting debts is very different to splitting assets because you have to share the money that you owe. Therefore, it is important for all involved to understand what is owed and who owes it and there is always the scope of settling the debts at this point by selling something such as a property. There is the possibility of swapping debt for assets when they property is divided but there is also the possibility of splitting debts equally – this of course depends on how amicably the divorce is.
Splitting assets and debt are usually at the forefront of the divorce arrangements yet there are tax implications to consider.
As you are not considered to be married any more, following divorce, your filing status changes. There is the possibility that capital gains tax could be expected, particularly if you receive a large amount when the property is divided and there is every chance that the legal fees linked to your divorce could be susceptible to tax.
Child support and any other family support payments could be taxed and if there are children involved, who will be exempt from making the payments? The tax payments can be quite high and so they have to be considered.
Are there children involved?
It is never a pleasant experience if there are children involved in the divorce, but the main fact is that they cost money. The cost of raising a child up to adulthood can run into the hundreds of thousands of pounds and this involves providing them with a home, clothes, food, school and a lot more and so, when it comes to divorce, child support becomes an issue.
If you are not granted custody of the child then you will have to provide regular payments as a form of child support. These are payments that you will have to commit to until your child reaches 18 years of age.
The payment will be made to the other parent as they are the ones who has to pay for the majority of costs associated with raising a child.
When it comes to divorce, things can become extremely complicated and so there are hurdles and barriers to slow you down along the way. While money may have been the reason for your divorce it can certainly cause you problems beyond that, but understanding some of the financial concerns when it comes to a divorce will prepare you for what lies ahead.
Author Bio K J Smith Solicitors are specialists in family law, with an expert team of family law professionals who are experienced in all aspects of family and divorce law.