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The Financial Implications of Divorce

The Biggest Area of Life That Will Experience Change

Divorce will change many areas of your life. Perhaps the area that will experience the biggest change, however, is your financial situation. While the obvious transition will be to your income, there are other financial implications to be aware of as you work through your divorce.

Spending and Saving Money

After divorce, one spouse is gone, which means their income is no longer available for you to use to cover your expenses. This can lead to changes in spending and saving habits. Some people may start spending more money after divorce, as they try to fill the void left by their former partner; others may become more frugal, as they realize that they need to be more careful with their money. It's important to find a balance between these two extremes so that you don't end up going into debt or living paycheck-to-paycheck.

Saving money is also crucial after divorce. You'll likely have less income than you did before, so it's important to project what you expect your finances to look like and to start setting aside money each month. An emergency fund can help you cover unexpected expenses, like a car repair or medical bill.

If you're getting divorced, it's important to sit down with a financial planner and figure out what your new budget will look like. This can help you make the necessary adjustments to your spending and saving habits.

Tax Changes

While your legal requirement to pay your taxes will never change, how much you may be responsible for each year may vary after divorce. For example, you can no longer file "married filing jointly" or "married filing separately" after a divorce; you must file your taxes at the "single" level. This can impact what tax bracket you are placed in and, therefore, how much you may be liable for.

In addition, you may have more money withheld from each paycheck after divorce. While not a requirement, you may wish to update your withholding status after divorce; changing your withholding status to "single" may result in more money being withheld from each paycheck, which could impact the result of filing your taxes each April.

Be sure to consult with your local tax professional for any tax-related inquiries.

Asset Division

When a couple divorces in Ohio, asset division will be one of the most important factors to consider. Generally, marital assets will be distributed equitably between the spouses, but the exact results of asset division could vary depending on several factors.

First, you and your spouse may negotiate an agreement on asset division and who receives what property after the divorce is finalized. However, if you and your spouse cannot come to terms on property division, then the court will decide who receives what assets in the divorce. This could lead to you not receiving certain marital assets that you may have wanted.

In order to protect your rights to certain assets, be sure to consult with your divorce attorney.

Work With Your Attorney

It’s no secret that divorce will change your life, but you may not have a clear picture of what you can expect after your divorce is complete. Speaking with your divorce attorney can provide you with the perspective you need in order to plan for the future. At Friedman & Mirman Co., L.P.A., our team will sit down with you and help you understand your options regarding various divorce issues. We will guide you throughout the process and provide you with realistic expectations on all the aspects of your life that may experience change.

To learn more about divorce in Ohio or to schedule a consultation, call us at (614) 412-3943 or visit us online.