Divorce is not an easy topic for debate, especially in a country where Marriage is considered not just a social event. It comes with few expectations and lots of emotions. We are not going to discuss upon these, though. What we will discuss now is the financial issues that arise after divorce and the planning to be done to take care of the same.
Here are a few financial aspects you would need to take care upon divorce:
This would invariably be the most important part of your divorce if you have a child. Whether the child will stay with you or your spouse would depend on the court’s decision. However, what about his/her future? What about the child plans or other investments you have already done on your kid’s name? You need to clear on these things first. If you have made some investments already, you can look at liquidating those and share the amount accordingly. However, if the investments are good ones, you might not want to break them. In such a case, you can put your child as the primary beneficiary for these.
Income for the child’s education and other expenses can be distributed by setting up a trust. Lump sum amount can be transferred to a trust which will take care of the child’s expenses accordingly till the age of the child specified.
Division of assets and liabilities
You need to make a list of all the assets and liabilities in your as well as your spouse’s name. Dividing assets and liabilities could be a little tricky. It would depend on whether your spouse is working or not. If your spouse is working, she/he might have contributed to the asset purchased or could be paying a part of a liability in hand. If your spouse is not working, you might have to give a part of your income to suffice the expenses of your spouse. It is called ‘alimony’. In such cases, division of assets cannot be done equally.
Revenues and expenditure
Till now, you would have spent on groceries, household appliances and other items whereas your spouse might have spent on real estate, EMI’s, deposits or other investments. All contributions to assets as well as liabilities should be noted down. Such share will make life easy for both of you and each one will thus be entitled to a fair share on the investments/debt.
A budget sheet can be prepared and the above said things can be included in the sheet. This sheet will also tell you how you can plan your own finances going ahead since you may be lose a part of the existing investments or even gain a higher share in the loans taken.
This is also a very important financial aspect to look into. There are chances that you have taken a joint home loan. Your spouse may be held in charge of clearing that liability post divorce. Your spouse may not be in a situation of clearing the loan later on. This will not just impact his/her credit rating but also yours since you were also a part when the loan was taken. Hence, it is important to separate these debts now to avoid discrepancies later on.
There are multiple aspects to look after during divorce. The above mentioned points are few among them. It is advisable to hire a financial planner who would advice you in the best way going forward. Not planning your finances in a proper way before divorce would only increase the complications involved in it. Stay focused in these tough times to make your financial journey a smooth affair later.