So you have now decided to divorce. You know it will be painful & scary, but you believe the time is right to have a single life.  Financial vulnerability and risks are inevitable.

Every year, approximately three million men and women head down the emotional and financial path of divorce. Following a divorce the cost is usually 25-50% more to maintain your pre-divorce lifestyle. A single household becomes twice as expensive as each spouse losses the benefit of the other spouses income. Economic discrimination due to gender gaps place additional financial burdens on women.   A woman’s standard of living may drop 27% while a man’s standard of living may increase 10%!

Now start with the financial basics in surviving your divorce! What are the basics?

• A secure place to live

• Create little or no debt

• Protect retirement assets or income

• Use of liquid money or assets

The most important of these basics is Liquid money! You will need money to find a place to live and hire an attorney.  You will also need money to pay your expenses during your divorce. Liquidity will definitely come in handy and enhance your position in the proceedings.

What about Debts? If possible pay off your debts now. The uses of savings or assets you can liquidate are the cleanest methods. Many divorced people find themselves responsible for their EX’s portion of debt since the exiting spouse refuses to pay. Legally, you may be responsible if your ex-spouse does not pay. Try to start your new life free of debt and with a new sense of self confidence!

What about Cash Issues and Retirement Assets in a divorce? If you and your spouse have retirement savings, each of you will probably be entitled to a one-half share or a portion based on a fixed ration of the number of years married and number of years of investing.   This money could be kept for retirement or used to repay other current expenses or debts.  Make sure you examine prospective tax treatment to avoid the 10% penalty on early withdrawal by the IRS.

Some tax questions to know about:

• Are spousal maintenance payments tax deductible?

• Who will be able to claim Head of Household status?

• Who gets the tax emption for the kids?

• Is child support non-deductible?

• Which Attorney fees are tax deductible?

Always remember to “Look at the big picture”.  Keep your focus on finances and parenting.  If you need help from smart professions, as your attorney, accountant, or mental-health professional, get it now! They will help you and your family with focus, objectivity and a long-term vision that is very difficult for you during this tumultuous time in your life. Now you need to be able to articulate you needs and goals for the future.

Do not forget! This time too shall pass and you may be, with planning, better than ever in the future!