For parents, getting divorced is not only extremely complicated emotionally, but also financially.
The financial implications of any divorce are very significant, but especially for couples who have children, says Jennifer Hartman, a principal at Greenleaf Financial Group LLC in Los Angeles.
In dividing up marital assets, she says many women often make a major mistake by opting to take the house in order to keep a sense of normalcy for their kids and in return, giving their husband the couple’s retirement funds.
“But what are you stuck with? A house that doesn’t appreciate as fast and has lots of expenses with it,” Hartman says. “It’s not really a good deal at all for the woman. And sometimes, unfortunately, lawyers are not always skilled in financial decisions.”
To avoid such pitfalls, Hartman recommends couples go to a financial planner who can analyze the whole situation—from asset valuations to tax implications—and provide perspective on what their assets are and how to best divide them.
“Paying someone to give you advice on that can be a real money-saver in the long run,” Hartman says.
Of course, one of the main financial issues when parents divorce is child support. Many states have specific formulas based on the non-custodial spouse’s income, which makes that calculation fairly cut and dry, say attorneys.
For example, in South Carolina, there is a specific chart that determines child support based on income, says Thomas M. Bultman, a partner at The Bryan Law Firm in Sumter, South Carolina. It also takes into account other costs such as health insurance and child care, he says.
As part of child support arrangements, Bultman recommends that the paying parent be required to have life insurance sufficient to cover future child support payments if he or she died. Bultman says a family court judge can compel the paying parent to get such coverage.
However, there are other financial issues that are often decided between couples as part of their own agreement without involving the courts. For example, many parents work out an agreement on future education expenses.
