Going through a divorce in Texas is typically an emotional experience, and it may be difficult to focus on the financial implications of the divorce. However, decisions have to be made that will impact on the post-divorce financial stability of both spouses. After the divorce, expenses may double — two mortgages or rent payments, two sets of utility bills and other household expenses, and so on — while overall income may remain the same.
Another aspect of a divorce that needs a person’s full focus is property division. This process may be best tackled with the support and guidance of professional advisors. Knowing what types of assets to agree to is vital. Although the division may seem fair and equal on paper, one spouse may end up with an asset that is illiquid, and this may be detrimental to that person’s cash flow.
Knowledge of the taxable status of each asset is also important when having to decide whether a brokerage account or tax-deferred retirement account will be more valuable. Post-divorce taxation will also play a role in cases in which spousal and child support are paid or received. Alimony is taxable to the receiver and deductible for the person making the payment. Child support is not seen as an income and therefore not taxable.
While the support of friends and family is important during this difficult time, it would be best limited to emotional support. For legal support and guidance, a divorcing spouse may benefit from retaining the services of an experienced Texas divorce attorney. A lawyer will assess the circumstances and evaluate the wishes and goals of the client before suggesting the way forward and the available options to achieve a suitable outcome.
Source: TIME, “Money and Divorce: Financial Rules for Splitting Up“, Jill Schlesinger, March 1, 2016
