Archie Richards/ Money Matters
Monday, December 26, 2005
financial problems accompany a divorce.
But stress is high, too. The stress
leads to poor financial decisions,
which worsen the financial situation,
which worsens the stress. Itís a downward
Take on the
stress first by obtaining counseling.
You donít have to be off your rocker.
You just need a temporary friend to
help you think straight.
Here are a couple
of common emotional matters relating
up makes everyone miserable. Some
people want to make things especially
hard for their former spouses. But
revenge makes a bad situation worse
-- especially on the children. Custody
fights hurt the children most.
divorced personís social life changes.
Married people are most comfortable
with married friends. Single people
want single friends. Divorced persons
have to find new friends at the
very time they need friends most.
now for some of the financial issues:
payments are deductible by the paying
spouse and taxable to the payee
support payments are opposite: Theyíre
not deductible by the payer, but
theyíre tax-free to the payee.
spouse might have minimized a career
to raise children. The settlement
should provide extra money to the
homemaking spouse to pay for additional
say the wife relies on the ex-husband
for child support, retirement benefits,
alimony or college education. But
if the husband dies, the wife is
left holding the bag. She should
acquire life insurance to protect
against her exís death. Since the
husbandís liabilities probably wonít
extend indefinitely, inexpensive
term life insurance should be sufficient.
spouse who has custody of the children
is inclined to keep the house. But
be sure to consider the long-term
effects. Letís say, for example,
that the two parties split things
equally: The wife keeps the house,
and the husband keeps the retirement
accounts, both valued at $400,000.
Whoops. The house is a cost burden
and cannot easily be sold. But the
retirement accounts are growing
assets that can be sold quickly.
The 50-50 split wasnít equal at
all. Retaining the house may be
too much for the custodial parent
to handle. Selling it and splitting
the proceeds would work better.
is complicated and stressful. Counseling
helps you to take on the financial
issues rationally. But consider
the financial decisions in terms
of their long-term consequences.