Tennessee residents facing a divorce might be in for an unpleasant surprise, especially if they do not understand their finances. If one spouse is in the workforce and the other is not, the stay-at-home spouse might not be prepared for unexpected expenses during and after the divorce.
Understanding the amount and type of debt that both parties hold is important. Remember to consider all debt, including credit cards, student loans and loans against investments. Home equity lines of credit and mortgages also play significant roles in the process. You should remember that both assets and liabilities are to be included in the dissolution of marriage.
Those moving through the divorce process should understand that spouses who own a home together will most likely have to sell it, either because one spouse does not work, or the payment of the mortgage relies upon a combined income. In some cases, the working spouse may be able to retain the home by buying out the other spouse. If either of the spouses has been out of work for a while, he or she may need to learn a new skill or update prior experience to prepare for re-entry into the workforce. Also, child care may need to be arranged. People returning to work may have to consider whether alimony or child support payments along with their salaries are enough to sustain them.
One spouse may be entitled to the other’s retirement accounts. In some cases, some of that money may be used for relocation or the purchase of a new home. However, the IRS may require payment of a penalty for early withdrawal. You should not forget the potential tax implications that may come with the dissolution of marriage. Understanding what is deductible and what is not may prevent potential issues with the IRS.
The divorce process is neither an easy nor a joyful one; however, speaking to an understanding and empathetic attorney may be the best course of action. An experienced legal counsel may be able to suggest a course of action that may offer you peace of mind and provide you with a favorable outcome.