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Dealing with the financial fallout of divorce

If you've been involved in a lengthy or costly divorce, there's no question that you may still need time to recover from it financially. Being on the end of the divorce where you lose your home, your assets or income, is devastating.

There's also the reality that those who divorce suddenly have to take on all their expenses without support. For those who paid for everything for two people in the past, this could be a relief. For others, it's an extra financial burden.

What should you expect following divorce?

Every situation is different, but the reality is that both spouses usually suffer financially in some way. Both spouses, if they worked before the divorce, will still need to work but will take on more expenses due to living apart. If one spouse did not work, then the higher-earning spouse may need to pay for alimony, which could be costly. The lesser-earning spouse would rely on those payments, and not receiving one or any could mean struggling to live while trying to find a job.

If there are children involved in the divorce, there's a real risk that child support payment will fall to one of the parents. These payments can be a substantial portion of income and could strain the parent's financial situation until he or she settles into a new routine.

Divorces also result in high tax bills. If you had many things you could write off on your taxes when married, you may lose access to those losses after divorce. If you take out retirement funds or sell stocks or investments, you may end up with a high tax bill that you were not expecting.

Of course, there are also legal fees. While some cases result in one spouse covering the fees in total, it's more likely that both spouses will need to pay their separate attorneys and for any documents they have to file with the courts.

Divorce isn't cheap by any means, but by knowing what kind of expenses you could face in the future, you can better prepare for the separation and divorce ahead of time. Sometimes, opening a bank account and separate credit cards in your name alone is the difference between struggling in the short time following divorce or having funds to fall back on when you need them most. Your attorney can talk to you more about what you can do to prepare.

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