Thinking About the Financial Consequences of Divorce
Dividing the family finances when a couple divorces can be more complicated and stressful than people realize, even if you and your spouse can be cooperative and civil. For couples with more financial resources, separating financial lives is especially difficult. This exercise encourages you to detail your family finances and think about what effect divorce will have.
Employment Details. List employment details for yourself and your spouse.
| Your Employer: |
Your Job Title: |
| Your Gross Annual Income: |
Your Gross Monthly Income: |
| Your Net Monthly Income: |
Your Other Income (pensions, rents, child support, second job, etc.): |
| Spouse’s Employer: |
Spouse’s Job Title: |
| Spouse’s Gross Annual Income: |
Spouse’s Gross Monthly Income: |
| Spouse’s Net Monthly Income: |
Spouse’s Other Income (pensions, rents, child support, second job, etc.): |
Financial Assets. List property and automobiles and fill in the information requested.
| Real Property (homes, land, etc.): |
| Property #1 (list): |
| Address: |
| Date of Purchase: |
| Purchase Price: |
| Down Payment: |
| Source of Down Payment: |
| Owing Balance on First Mortgage: |
| Owing Balance on Second Mortgage: |
| Current Appraisal Value: |
| Monthly Payment: |
| Title Held By: |
| Equity: |
| Lot Description (Must have this for legal paperwork.): |
| Property #2 (list): |
| Address: |
| Date of Purchase: |
| Purchase Price: |
| Down Payment: |
| Source of Down Payment: |
| Owing Balance on First Mortgage: |
| Owing Balance on Second Mortgage: |
| Current Appraisal Value: |
| Monthly Payment: |
| Title Held By: |
| Equity: |
| Lot Description (Must have this for legal paperwork.): |
| Do you or your spouse have property that either of you will inherit? Value? |
| Do you have timeshare property? Value? |
| Automobiles, Recreational Vehicles, etc. |
| Vehicle #1 |
| Year: |
| Model and Make: |
| Title Held By: |
| Balance Owed: |
| Monthly Payment: |
| Current Bluebook Value: |
| Equity: |
| Present Possession: |
| Vehicle #2 |
| Year: |
| Model and Make: |
| Title Held By: |
| Balance Owed: |
| Monthly Payment: |
| Current Bluebook Value: |
| Equity: |
| Present Possession: |
| Vehicle #3 |
| Year: |
| Model and Make: |
| Title Held By: |
| Balance Owed: |
| Monthly Payment: |
| Current Bluebook Value: |
| Equity: |
| Present Possession: |
Personal Property. List your valuable personal property items (e.g., jewelry, computer), their financial worth, and any money you may owe on that item.
| Personal Property | |
| Item: Worth: Balance Owing: |
Item: Worth: Balance Owing: |
| Item: Worth: Balance Owing: |
Item: Worth: Balance Owing: |
| Item: Worth: Balance Owing: |
Item: Worth: Balance Owing: |
| Item: Worth: Balance Owing: |
Item: Worth: Balance Owing: |
| Item: Worth: Balance Owing: |
Item: Worth: Balance Owing: |
| Item: Worth: Balance Owing: |
Item: Worth: Balance Owing: |
Financial Accounts. List your (and your spouse’s) joint and separate financial accounts, including checking, savings, retirement, stocks, etc.
| Checking Account Amount: |
Savings Account Amount: |
| Pension #1 Worth: |
Pension #2 Worth: |
| 401K #1 Worth: |
401K #2 Worth: |
| Stock 1: Current Value: |
Stock 2: Current Value: |
| Cemetery Plots: |
|
| Life Insurance Plan #1 Premium: Beneficiary: Amount: |
Life Insurance Plan #2 Premium: Beneficiary: Amount: |
| Are you expecting a federal or state income tax return this year? In what amount or amounts? |
|
| IRA #1: Amount: |
IRA #2: Amount: |
Business Interests. List any business interests you and your spouse have and their value.
| Business Interest #1: |
Value: |
| Business Interest #2: |
Value: |
Debts and Obligations. List current debts and other financial obligations you and your spouse have, and record the information requested about them. Include estimated federal or state income tax you may owe this year.
| Name of Debt: | Purpose: | Balance Owing: | Monthly Payment: | In Whose Name: |
Anticipated Monthly Expenses After Divorce. Do some financial planning about how you will meet your monthly financial expenses if you divorce. Estimate the amount for each expense (if it applies to your situation). Then add up the expenses. Finally, try to estimate your anticipated monthly income. Then compare your expenses to your income.
| Monthly Expenses | Estimated $ | Comments |
| Mortgage/Rent | ||
| Property Tax | ||
| House/Rental Insurance | ||
| Food/Household Supplies | ||
| Utilities | ||
| Clothing | ||
| Uninsured Medical Expenses | ||
| Uninsured Dental Expenses | ||
| Childcare | ||
| Health Insurance Premiums | ||
| Education Expenses | ||
| Automobile Loan Payment | ||
| Automobile Gas, Maintenance, Insurance | ||
| Donations to Church and other Charities | ||
| Entertainment Funds | ||
| Misc. for Children: | ||
| Other: Retirement Savings (401k, employer pension plan, IRA) | ||
| Other: | ||
| Other: | ||
| Total Expenses: | ||
| Monthly Income | ||
| Employment | ||
| Interest Income | ||
| Support Payments from Spouse | ||
| Other income: | ||
| Other income: | ||
| Total Income: | ||
| Difference (Income – Expenses or Expenses – Income): |
Thinking Ahead. It has probably taken a lot of time and effort to fill out the information in the forms above. But if you have done this, you are in a better position to answer the following questions. Not all of the questions may be applicable to your situation. (These questions were suggested in Fowlke, L. D. (2004). Thinking divorce? Think again. Orem, UT: Fowlken Press (see pp. 30–33).)
Do you have adequate money saved that would help support you and your children after the divorce, especially in the first few years when money can be extra tight?
Do you have home furnishings, a car, and other possessions you will need after the divorce, or will you need to purchase them?
Have you paid off your debt as much as possible? How much debt will be assigned to you after the divorce?
Who will count the children as withholding exemptions for income tax purposes? Often, the parent who pays child support claims this right, but since child support is never enough to cover the overhead (home, utilities, car repairs, miscellaneous expenses) or pay half the expenses of rearing children, the custodial parent should insist on claiming this benefit.
Also for federal (and some state) tax purposes, the custodial parent should claim the Earned Income Tax Credit (EITC) for heads of household with dependents. See the instructions to Form 1040 about dependents, withholding exemptions, support as it relates to custody arrangements, and the EITC.
Do you have adequate education or training necessary to provide for your children and yourself after the divorce? If not, how will you get that education or training?
Will you need and can you afford childcare if you have to go to work full-time after the divorce?
Will your work provide healthcare benefits for yourself and your children? Will your spouse’s work cover health benefits for your children if they don’t live with him/her?
Does your work provide pension/retirement plans or can you invest for retirement as an individual? In order to receive half the value of your ex-spouse’s retirement accounts (based on the years when you were married) at the time of his or her retirement, you must provide a form called a QUADRO (Qualified Domestic Relations Order) to the administrator of each of your ex-spouse’s retirement accounts at the time of the divorce. You will need an experienced lawyer’s help with this.
If you don’t have all the things you will need to provide for yourself and your children after the divorce, how long will it take you to get them, and how will you get them?
Is it possible that you and your ex-spouse could set up college savings funds for your children? If possible, try to make this payment a part of the final divorce decree, separate from child support payments.
It is difficult to maintain your financial lifestyle after divorce. What are some things that you could give up to save money?
There are many other smaller family expenses that we sometimes forget about, such as lessons for piano, ballet, karate, etc., extra-curricular school activity fees (e.g., sports, choir, etc.), summer camp, scouting, and many more. How would you cover these kinds of expenses that are important for your children?
What Does All This Mean? Now, having considered all these things, what do you think about the possible financial consequences of a divorce? Are you optimistic that you can make things work? Are you concerned? Why? Write down your thoughts and feelings: