Thursday, 16 September 2010

Financial Planning for Divorce

A divorce can be such a painful experience that it can wreck havoc in one’s life. Divorce has the ability to break a person emotionally or psychologically to such an extent that, to stand again on one’s own two feet, may prove to be a difficult proposition.

Through the pain and tribulations of a divorce, one has to stand firm and decide upon other aspects of the future life. This will involve extracting one’s self from the intermingled finances which both the partners had enjoyed before the divorce proceedings.

It may mean settling all credit card bills that the two had shared, a clear cut settlement of the house mortgage, various investments that the couple may have made together etc. This can be a truly Herculean task and not at all easy to deal with.

This involves untwining of the interwoven finances. It may be that the divorcing couple are staying in a house, which both partners are fond of. Thus it will be a difficult decision for both the partners to let go of that house or to come to an amicable settlement in regard to the same.

The disputes concerning financial matters can truly bog down the two erstwhile partners. In fact the proceedings of the divorce proper, do not take as long a time period, as does the settling of various financial issues.

This, the financial side of divorce, may take a long time to settle but nevertheless it may be the most important financial event of a person’s life span. All the choices made, and the various decisions taken, on this account, can have far reaching implications on the financial well being of a person for the rest of his or her life.

For this very express reason, the term financial planning, gains extreme importance. Financial planning can go a long way in helping both the divorcing individuals to come to terms with the various finance related issues.

In succinct terms divorce financial planning is planning that is done to ensure the concerned individual is able to get by and fare well in financial terms, after the divorce. In itself it answers all the issues raised above.

In general terms the most difficult part of financial planning may be the very first step itself. However all the difficulties inherent in that step are easily offset or mitigated by the rewards accrued from it. Not only does it lead to taking control of ones finances and thus the life, it may also give rise to peace of mind that one may have lost otherwise.

The best course may be to approach an independent divorce financial planner for this job. The divorce financial planner must enjoy the trust of both the partners in order to fulfil his or her job. There have to be free and frank disclosures made to this individual by both the partners.

As far as the financial aspects of divorce are concerned there are different steps to reach it. These steps or stages involve:

Disclosure: At this nascent stage both the partners are required to make total disclosures regarding their income and assets. This is the first step towards moving ahead with a proper financial settlement.

Negotiation: In this second stage of the financial settlement betwixt the two divorcing partners, they get to negotiate about the division of the finances and assets. It will involve negotiating on issues of child support, alimony, social security, various mortgages and the pension plans of the two individuals.

Agreement: As the heading suggests, it is the final conclusion or culmination of the entire process. If the two partners are unable to decide upon everything then they may have to contest in the law courts and wait for the final court directives in this regard.

It is also advisable to take appropriate guidance from a proper specialist about the most tax efficient, the most suitable method regarding the transfer of the matrimonial assets. This will help in maximising the gains made from the settlement.

Throughout this process one must try to keep the nerves of steel despite the emotional roller coaster ride that he or she is being subjected to. One should also try to overcome all ill will and be both reasonable and considerate towards his or her erstwhile partner.

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