You may have noticed signs that your marriage was in trouble. Then again, there may have been a particular string of events that had irreversible effects on your relationship. Either way, as you prepare to settle a divorce, it’s important to keep several issues in mind, especially finances. Many Texas households include spouses who both work full-time. When you transition to a single income lifestyle, it can present challenges.
Thinking ahead and careful planning can help you make sure you can provide for your needs as you move on in life. If you’re a parent, the importance of financial issues in divorce is intensified. Not only are you concerned about the ability to make ends meet for yourself, but your children’s well-being is a top priority.
Texas is a community property state
In addition to making child custody decisions and writing terms of agreement for a co-parenting plan, you and your spouse must also resolve property division issues to finalize your divorce. Texas is different than most other states in that property division proceedings operate under community property guidelines. This means you and your ex will split all marital property 50/50 in divorce.
It’s possible to negotiate a fair agreement without contention if you’re both willing to peacefully discuss financial issues, making sure to fully disclose all assets and liabilities. It’s also often possible to trade assets, as long as there is equal value in the property you each receive.
Don’t forget to discuss the tax implications of divorce
When mediating a settlement and focusing on financial issues, it’s critical for your discussion sessions to include talk about taxes. Will you or your ex be the one to claim “head of household” status? Which of you will claim your children as dependents? Are there any tax laws that will have a specific impact on your settlement?
It’s helpful to speak with someone who is well-versed in tax issues in conjunction with the property division aspects of a divorce. Lack of knowledge or a tax oversight can wind up costing you a lot of money.
What about retirement benefits?
You may be entitled to half of your ex’s retirement benefits. There is often a penalty for early withdrawals, however. It’s important to research IRS regulations to avoid such penalties. If you’re able to tap into your share of benefits, it may prove to be a financial help to you in your divorce.
Many people use these funds to help cover relocation expenses or to place a down payment on a new home. As with all other financial issues, a key factor is to make sure you understand any and all regulations or laws that may apply to your specific circumstances. Once you have all the information you need, you and your spouse can negotiate a fair settlement.