NEW YORK (MainStreet) — Nobody is thrilled with prospect of a divorce, but there is something about the month of January that gets dissatisfied married couples thinking about a split.
Divorces rise in January, and Internet searches for terms such as "divorce" and "child custody" rise in the first month of the year. That's why January has earned the unfortunate moniker "divorce month" among therapists and lawyers, who are on the front lines of the divorce wars.
Apparently, married couples considering a split wait until after the holidays to file, presumably because they don't want to ruin the holidays for family and friends.
That many couples don't plan ahead for a breakup only adds to the heartbreak.
"The number of people who jump into a divorce without realizing the kind of financial implications it has is disheartening," says Nicole Mayer, a financial planner at Chicago's RPG Life Transition Specialists. "It's like having a baby without ever reading a parenting book. We want folks to know what to expect, and are prepared for the unexpected."
If you're in a troubled marriage, time and therapy haven't helped and you want out, take some time first to plan for the financial side of divorce. Mayer offers these tips to get that process started:
Know the costs. Divorces cost money, and often lots of it: Mayer says the average divorce costs $20,000. "When you factor in lawyers, tax advisors, time off work, the cost of a divorce is greater than it may appear at the outset," she says. "Do your research so there are fewer surprises. Also, consider mediation as part of your divorce, which significantly reduce the costs."
What do you need right now? You might need to get your hands on some cash to start the process of living apart from your spouse, but you need to make some smart decisions first. "If you're concerned about making ends meet during and after the divorce, that should inform your negotiation strategy," Mayer says. "Stocks and bonds, which can be easily liquidated, should be a priority above retirement accounts or other long-term investments."
Sit down and review your taxes. Mayer advises scouring over the past five years of tax returns as a married couple. Like any financial asset, taxes are a negotiable asset, and knowing who owes what and who gets what from a tax return needs to be on the table.
Take care of your beneficiaries. Review your retirement plan and insurance policies to see what changes need to be made to protect minor children. "Amidst all the paperwork and meetings, this is often overlooked," Mayer says. "If you have to name a minor child as a beneficiary, you'll have to determine a guardian who is not your soon-to-be-ex."
Review joint debt. Debt incurred during a marriage has to be dealt with as well. The downside of not reaching a resolution on shared debt is significant. "Regardless of what settlement terms you secure, if one spouse does not pay a debt you both incurred as agreed, the other is responsible," she says.
— By Brian O'Connell for MainStreet