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Financial ramifications of a divorce

On Behalf of | Sep 25, 2015 | Property Division |

Going through a divorce can be emotionally difficult for many Pennsylvania couples, but it can also greatly impact both parties’ financial situations. Part of this can be due to alimony and child support payments, but the majority of the change is from now-separate living expenses, including housing, utilities and groceries. Because of these additional expenses, alimony and child support may not cover all of the recipient’s needs. The payer can also suffer because this reduces available funds for other expenses.

Though it is not necessary to hire attorneys, many couples choose to do so. This can help them to receive objective advice from outside parties. Both parties should prepare complete financial information before speaking with their attorneys to ensure that they receive accurate advice. This information should include statements about each party’s earnings, possessions and debts as well as an inventory of marital assets and obligations.

The final financial aspects of a divorce involve taxes. Both parties will begin filing separate returns, so they should determine who will claim any children as dependents every year. Alimony payments could also affect both parties’ tax returns, so they may wish to discuss these changes with a financial expert during the divorce proceedings. Both parties should also consider whether they need to change beneficiaries on any of their life insurance policies or retirement accounts.

Pennsylvania follows the principle of equitable distribution, so a court will make its determination on property division on the basis of what it deems to be “fair”. However, the couple may very well have a different concept of fairness. In such instances, each estranged spouse may find it advisable to retain separate family law attorneys for the purposes of negotiating a settlement agreement that, once reached, can be presented to the court for its approval.