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Understanding financial changes as part of a divorce

The impact a divorce can have on finances is very real. In fact, there is no way to go through a divorce without addressing the economic impact on both parties. Missouri residents can get a clear picture of those economic changes by knowing just how a divorce will affect their bottom line after the split is finalized.

The reality is many former couples are going from what is typically a two-income situation to a one-income household. If one person handled the bulk of the budget or financial decision making, the other person may have no idea what a post-divorce budget or lifestyle may actually look like. While a reduction in spending seems the logical solution, both parties need to know down to the dollar what they will be working with after the divorce. This can affect lifestyle, housing decisions and the outcome of property division settlements, and this is why it important to have a clear post-divorce budget.

The bottom line of a checking account or the exact amount left after splitting assets is not the end all and be all to how divorce will impact finances. Taxes play a role. Alimony is affected by taxes as the paying spouse receives a tax deduction. Liquidating assets can impact taxes also. Knowing how taxes will be affected before making a big decision may be best.

The transition of divorce and the role it has on finances can influence every aspect of a divorce, including whether to keep a house, what job opportunities to pursue and what quality of life may be expected. Other financial aspects of a divorce may not be so easily predictable or foreseeable. However, Missouri couples can get information about the tax implications and predict an approximate budget in order to move forward without any confusion or misconceptions.

Source: nj.com, "Financial mistakes to avoid in divorce", Kurt Rossi, March 13, 2016

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