Financial Considerations Relating to Separation & Divorce
A divorce or breakdown of a marriage can have significant financial implications for both parties involved. Some of the key financial aspects to consider are:
1. Division of Assets: One of the primary concerns in a divorce is the division of marital assets, which can include property, investments, bank accounts, pensions and other assets acquired during the marriage. The fair division of assets will depend on many factors which must be taken into account when agreeing the settlement.
2. Spousal Maintenance: In some cases a spouse may be entitled to receive financial support from the other spouse after the divorce. The duration and amount of the support are usually determined by factors such as the length of the marriage, financial disparity between spouses and their respective earning capacities.
3. Child Maintenance: If there are children of the marriage, there may be a requirement for one parent to provide financial support for the upbringing and welfare of the children.
4. Marital Debt: Along with the division of assets, the responsibility for shared debts accumulated during the marriage must also be taken into account. This could include mortgages, loans, credit card debts, and other liabilities.
5. Tax Implications: A divorce can have tax consequences and it is essential to understand the tax implications and plan accordingly to minimize potential tax burdens.
6. Insurance Coverage: Divorcing spouses need to evaluate their insurance policies. This may involve modifying policies or obtaining new ones.
7. Pensions: Pensions are marital assets and must be taken into account in the financial settlement. Parties must obtain their CETV valuations (Cash Equivalent Transfer Values) for all pension plans held.
8. Business Interests: If either spouse owns a business, its valuation and potential division may need to be included in the settlement negotiations.
9. Estate Planning: After a divorce, it's crucial to update estate planning documents like wills, trusts, and beneficiaries on insurance policies and retirement accounts to reflect the new circumstances.