Wednesday, 30 April 2014

Tax Planning for Divorece

Having a fair and complete knowledge about your finances is the key to save you from a financial disaster. What you should aim is to get a fair and equitable settlement in divorce. For this, you need to have a strong legal support and stable mindset for quantifying and visualizing the proposed settlement. You need to assess your current assets and evaluate how much you need to spend on fighting to get them.
  1. Financial Victim : If you discover your spouse intentions for divorce, don’t be involved in emotional hustles then. Your time is valuable, use to secure your life first. Remember to make copies of all important financial records like bank accounts, credit card statements, real estate and so on. If your spouse is after liquidating the marital assets, then get legal notice to restrain him. Check your current finances, cash, loan and credit.
  2. Divorce through Mediation : Couples often go for adversarial court settlement unnecessarily, even if they have very less finances to debate over. You can save much of your already limited resource by considering divorce through mediation. It also saves you from emotional aggravation and provides fair chance of coming to equal terms with your spouse.
  3. Punishing Your Spouse : Taking revenge from your spouse at the expense of your money is not a good idea. Firstly, court will not consider your emotions when dividing the marital assets and your lawyer will take undue advantage of extending the case, leaving you financially drained and more emotionally bitter. Better advice is to use your money to claim what you deserve as amiably as possible and leave your emotions out of it.
  4. Tax Impact on Your Finances : You may think that 50-50 distribution of your finances is a best deal you can have, however, apply the taxes and think again. Now it wouldn’t seem the best deal to you. You compare the value of your assets with your spouse after on tax basis; you’d be surprised to know how far the impact can go.
  5. Accurate Budget : People often fail to produce a budget, leave apart accurate, thinking they can deal with the expenses as they come. However, later they find themselves worrying over how to meet the bills. You should hire a professional financial analyst to get a clear picture of what you have and what you can afford to expend, to leave you with appropriate monetary support after all expenses post-divorce.
  6. Emotional Attachment to Divorce Negotiation : People often become emotional while dealing and negotiating the divorce settlement, especially with marital assets like home. However, you should not let emotions take over your decisions as they can make you pay heavy price later on. Take decision on what you would want and how you’d handle having or losing it.
  7. Updating Estate Documents : People often forget to update their will and insurance policies during divorce and end up losing what they intended to keep to themselves or your kids. Update your status before your spouse take undue advantage of your assets.
  8. Post-Divorce Financial Planning : What people fail to develop is a post-divorce financial plan, which can cause disorder in your post-divorce life. Post-divorce plan is not to manage finances after your divorce but to understand how much you will need and you should claim to have your life well settled post-divorce.
Arriving at mutually beneficial divorce settlement takes lot more than going through divorce and claiming your rights. You need to have a financial plan and checklist ready prior to divorce proceedings. Few things to keep in mind to get your finances on line are listed as above to serve as guideline towards your financial planning

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