It is a well-known fact that many marriages do not survive. When people in Larimer County go through a divorce, they can often be caught up in the emotional upheaval taking place within their life. However, it is important for people to keep in mind that the decisions they make during the divorce can have a financial impact later on.
Colorado is an equitable division state and this means that a person could receive more or less than half of the marital property and assets. According to The Courier of Montgomery County, people need to put aside their emotions and look at their finances in an honest way. This means that they should take the time to study their tax returns over the last five years, which will give them a clear picture of how much their spouse makes. This can alert them if their spouse is trying to hide any assets or money.
Sometimes, people don’t always split every asset. Spouses may choose the house while others may want the retirement plan. However, spouses should always look at the positives and negatives associated with these kinds of decisions. A house may go down in value while a retirement plan increases. Likewise, it is also important for spouses to make sure that they have a clear understanding of all marital property.
Regardless of whose name the retirement plan is under, spouses should understand that it is marital property and therefore could be subject to division. Retirement plans, like IRAs and 401(k)s, can be subject to taxation and fees if money is pulled out of them before the person reaches retirement age. According to Fox Business, spouses should make sure that the split is completed as soon as possible – preferably before the divorce is final.
One safeguard that people should consider getting is a qualified domestic relations order, which is basically an order from the court regarding the splitting of a retirement plan. Having one of these orders protects them from having to pay any additional fees.
Insurance is designed to be a financial buffer but when people are going through divorce, they often fail to think about it. However people should take the time to look at the following types of insurance to protect themselves financially:
- Life insurance – if a spouse is receiving spousal support or child support, then that spouse may want to stipulate that a life insurance policy should be established. This ensures that the spouse or the children will still have a source of financial support in the event that the paying spouse dies.
- Home owner’s insurance – the person keeping the family home should understand that he or she will be responsible for the home owner’s insurance. The person giving up the home should get renter’s insurance and make sure that their name is taken off of the house’s paperwork to avoid unnecessary financial issues.
- Health insurance – The spouse who carries the health insurance needs to notify their company of their new single status. Spouses who fail to contact their insurance provider could be subject to fines or may even lose their coverage.
In addition, people should also give some attention to their auto insurance carrier to make sure they don’t continue to pay for insurance on the other spouse. Reuters says that spouses receiving financial support may want to negotiate for the payments of their coverage in their divorce settlement. Talking to a n attorney can be extremely helpful in such matters.