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Protecting Your Finances in a Divorce

Anyone going through a divorce has a number of issues to consider as he or she looks to life as a newly single person. Concerns, such as where to live, who keeps the dog, and what is the best way to divide the household furnishings are decisions all divorcing couples must face. One overriding item will always be how the divorce affects a person’s financial stability now that income and debt obligations have shifted to one party. Certainly, some individuals will be hit harder than others, especially those that took an extended period of time away from the workforce, and there is no way to get around the fact that the vast majority of divorcing couples face a reduction in income of 50%, which will obviously have significant impact on resources. However, there are steps individuals can take to reduce the short- and long-term consequences of this transition. If a person takes a proactive approach to adjusting his or her financial picture, it is possible to exit a marriage with minimal financial fallout. A discussion of the strategies someone contemplating or actively involved in divorce can use to protect his or her financial health will follow below.

Get a Handle on Financial Liabilities

Divorce decrees include provisions on property division that will divide ownership of assets and liabilities. Indiana law on property division starts from the premise that an equal division is fair and reasonable, although it is possible to challenge this presumption. Consequently, divorcing couples in Indiana can expect to assume responsibility for at least half of any mutual debt. However, it is important to understand that even if a divorce decree assigns a jointly held debt to one spouse, unless the debt is refinanced or transferred into one name, the creditor will still pursue the other party if the debt is unpaid. Thus, both parties should seek to refinance debts in their own names, or better yet, pay off the debt before the divorce is finalized to avoid any future legal entanglements. Many divorce decrees will include terms that require refinancing within a certain time period, but it is best to handle this issue during the divorce process, if possible.

Protect Your Financial Future

In midst of the all the change and emotional upheaval divorce can bring, it is easy to forget about planning for long-term future goals and the financial security of your family, but if a person has children, it is important to consider what would happen to them if a parent was incapacitated or died. Some easy ways to protect a family is to take out a life insurance policy, execute a will, and make provisions to care for young children in the event of unforeseen circumstances.

If one already has insurance, an estate plan and retirement accounts, it is important to update the beneficiary designations to ensure that the former spouse does not receive a benefit. Divorce does not automatically terminate a former spouse’s right to death benefit for these types of accounts, but it does remove a former spouse’s right to inherit property under a will or revocable trust by treating the ex-spouse as predeceasing the ex-partner.

Consult a Family Law Attorney

Divorce creates a lot of financial consequences that divorcing couples should consider. An experienced divorce attorney will be able to tell you about the most pressing issues and ways to reduce their impact. Christopher L. Arrington is highly knowledgeable in family law matters and can help you make an easier transition into the next stage of your life. Future clients living in the Indianapolis area, should contact his office to schedule an appointment.



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