There is no doubt that divorce takes an emotional toll on everyone involved; however, it can also have a serious financial impact on either or both spouses. In fact, divorce often results in a significant financial disparity on the parties post-divorce. If you are contemplating divorce, it is important to recognize – and plan for – your post-divorce financial picture. Toward that end, Dallas divorce attorney Rita M. Boyd discusses five ways that a divorce can impact your finances.
Your Overall Financial Health
Throughout your marriage you had someone else to help share the financial burdens involved in running a household. Even if your spouse did not work outside of the home, he/she worked inside the home which made it easier for you to focus on earning money. Once divorced, your finances will be entirely your responsibility. Regardless of how your marital assets are divided and how much money you earn, your overall financial health will change post-divorce. For most people, there are expenses and bills that they never had to worry about after a divorce. For example, you may now have to pay child support or pay for childcare. You may also suddenly lose tax deductions or find yourself in a higher tax bracket. Your savings may dwindle rapidly if you failed to anticipate these new expenses and responsibilities.
Your Credit Score
Unfortunately, your credit score may be more important after your divorce yet is likely to take a hit because of the divorce. During the marriage you probably worked together with your spouse to acquire assets which built up both your credit scores. One of you may also have been responsible for ensuring that bills were paid on time, further increasing your credit scores. Post-divorce, however, you may find that your credit score has dropped significantly. That may be because your divorce itself resulted in major financial problems such as bankruptcy, repossession, or foreclosure or it could just be because the stress and anxiety of the divorce process meant you were less vigilant about paying bill son time.
If you and your spouse own a business, divorce becomes more complicated. It can also increase the likelihood of a changed financial picture post-divorce. Even if one of you owned the business prior to the marriage, business assets may still be part of the division of assets during the divorce. Texas is a community property state which means a court will assume a 50-50 split of marital assets. This means that everything from financial accounts to equipment to intellectual party owned by the business is potentially up for division in the divorce. Moreover, unless you plan to sell the business during the divorce, you will need to decide who continues to own and operate the business and how the other spouse will be compensated for his/her share of the business.
One of the first questions people frequently ask when contemplating divorce is “Who gets the house?” While the issue of who lives in the marital residence after the divorce is over is certainly important, it is equally important to understand that the wealth you and your spouse have built up in real property will be significantly diminished post-divorce. For example, if you and your spouse have $200,000 worth of equity in real property, you may walk away with only half of that in the divorce. The decrease in real property wealth can, in turn, impact your ability to qualify for loans, including a new mortgage.
Women and Finances Post-Divorce
Although this is finally starting to change, a woman’s income and wealth historically decreased after divorce while a man’s income and wealth increased. Not only was this a reflection of the disparity in earning power, but also the fact that women typically had custody of the children after a divorce and child support rarely made up for the added expenses involved in raising children. Today, both of those are slowing changing; however, men continue to fare better financially (on average) after a divorce than their female counterparts. This is true even for women who are divorcing later in life. According to one report from the U.S. Government Accountability Office, women’s household income fell by 41 percent following a divorce or separation after age 50, while men’s household income dropped by only 23 percent.
Contact a Dallas Divorce Attorney
If you have additional questions or concerns about divorce in Texas, contact an experienced Dallas divorce attorney at Rita M. Boyd, P.C. to discuss your legal rights and options by calling 972-380-8000 to schedule your appointment today.