Divorcing individuals in Kentucky and elsewhere may face financial issues that are far more long-lasting than the emotional and practical issues that also accompany the end of a marriage. Many people experience a great deal of stress about their financial future after the split, but by paying attention to how they manage their funds, they can help improve their outlook. There are four major categories that can be impacted by a divorce: assets, liabilities, expenses and income.
Assets include savings and checking accounts, investment funds, cash, mutual funds and other types of saved money. Retirement funds often represent the largest single asset held by a couple seeking a divorce, so it is important to divide these funds properly in order to avoid significant and unnecessary tax penalties. At the same time, it is imperative to consider the future value of assets when dividing them during a divorce. Cash, on hand, may not have the same value as a retirement fund, especially if the beneficiary will need to pay taxes on future distributions.
Real estate can be another significant financial issue in a divorce, especially the marital home. For some couples, it may be an asset that needs to be divided or accounted for. However, for others, it may represent a significant debt. Credit cards, mortgages and other bills will need to be dealt with and often refinanced during a divorce with the debt apportioned between the former spouses.
There is a number of issues that can be raised during the divorce process that can affect both parties' finances for years to come. By working with a family law attorney as well as a financial planner, a divorcing spouse can strive to achieve a fair property division settlement and develop a clear financial plan for the future.