How to Reduce Financial Loss During Divorce on Long Island, NY

There’s no getting away from the fact that divorce on Long Island, NY impacts nearly every part of your and your family’s life. One of the most significant and potentially devastating, to one party or the other, or both, is the family’s finances.

There are many ways that divorce can change the financial situation of each party to the divorce. To manage these changes, and minimize the negative effects these changes can have, you need to take some steps to protect your resources immediately.

Of course, the first thing to do is to create a realistic budget that outlines your financial needs and how your monthly income can meet those needs. Looking beyond that, here are three key areas you should be prepared focus on in your post-divorce life:

Understand the Impact of Divorce on Your Taxes

Your tax situation is going to change significantly with a new filing status and, in many cases, a new tax bracket. If you have dependents, you and your ex must agree on who will claim them on their taxes or if you will alternate claiming them every other year. 

Now, during the year, make sure you update your withholdings on your paycheck to match what your financial obligations are more likely to be. If you are not able to claim dependents, you may benefit from increasing your withholdings to avoid a big tax bill later. 

Also, consider all dividends and stock sales, especially if these are a component of the divorce. You may face financial implications in some situations for capital gains with some of the investment properties you sell as a component of your divorce.

It’s important that you meet with an accountant now to create a plan for your taxes now before you’re surprised later.

Navigating Retirement Account Changes After Divorce

Retirement accounts can be a confusing component of divorce because they are all very different in terms of how they are taxed. Money added to retirement accounts during your marriage, as well as any pension plans that were built up during this time, are considered marital property and must be a consideration in the division of assets.

As a component of your divorce on Long Island, NY, you will need to determine if any changes must occur to split the assets, if you will keep your retirement account, and how you will utilize it moving forward.

It’s a good idea to make sure you’re planning for those changes immediately. If you have to take money out of your retirement account to help pay for divorce expenses or living expenses, there could be fines to pay, and it will impact your long-term savings. For these reasons, during your divorce negotiations, you may want to keep money in these accounts where they are and find another way to equitably distribute assets. Doing so can help reduce tax implications later and also help your retirement accounts to continue to grow.

What To Do About the Marital Residence After Divorce on Long Island, NY

One of the most impactful financial strategies you need to work out now is what happens to your marital home on Long Island, NY. While emotions are very difficult to separate from the decisions you will make based on your financial health, take into consideration the following:

• Do you have the means to continue to meet all of the financial obligations of the home? This includes all mortgage, tax, insurance, maintenance and repairs, and improvements over time.
• Would moving and selling the home allow you to create a new financial future for yourself without a significant mortgage burden? Could you sell the home and use the proceeds you receive to purchase a property that is a better option for you?
• Could a new home lower your monthly housing expenses enough to enable you to invest the proceeds of the marital residence home sale to help defray your other living expenses?
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• If you want to maintain the home and your spouse will leave, you may need to qualify for a new mortgage. This would allow you to refinance the loan into your name and use the proceeds from any available equity to pay off the ex. Will you have enough income and credit to qualify for an affordable mortgage?

Make sure that the decisions you make about the marital home are ones that makes sense to you financially now and for your future, not just based on your emotional ties to the property or your desire to remain in the home your children grew up in.

Other Financial Factors to Keep in Mind in Your Long Island, NY Divorce

There are numerous other factors to consider when it comes to creating a strong financial path forward. Keep these in mind:

• Know what your income is likely to be in the year or two to come. Do you need to have a plan to grow that income to meet your financial needs for the future?
• Consider your credit score. Is it high enough to enable you to borrow at a reasonable rate and term?
• Ensure you remove your ex from all credit cards and other loans you have.
• Update all insurance coverage with new beneficiaries and contact information.

Don’t overlook the costs associated with filing for divorce.

Put Our Team of Experienced Long Island, NY Divorce Attorneys to Work for You

At Hornberger Verbitsky, P.C., we know divorce is a huge financial change. Our team of experienced Long Island, NY divorce attorneys can help guide you into ways to protect your assets and your financial future. Call us now for a free case evaluation at 631-923-1910 or fill in the short form on this page and we’ll get right back to you.