Michael E. Eisenberg
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Montgomery County Family Law Blog

Financial considerations in divorce

Divorce is one of the most stressful events that a person can go through in life, and it is becoming more common for people over the age of 50. When people in Pennsylvania get divorced later in life, they are more likely to have financial investments that need to be divided and accounted for before, during and after the process is complete. Among the tasks that should be accomplished are updating beneficiaries, gaining access to accounts, dividing investments and splitting retirement accounts.

Beneficiaries must be designated on a number of different types of assets. On some of them, a person's spouse is automatically designated unless a change is requested. For that reason, it is important to make sure the beneficiary designations on any accounts are updated following a divorce, or the assets might automatically transfer to the person's ex-spouse on death.

Does your ex have a claim to your inheritance in a divorce?

When you know that divorce is in your immediate future, you will likely start worrying about the financial implications of the end of your marriage. From consulting with an attorney to trying to build up a savings account, there are many ways people attempt to offset the financial consequences of an impending divorce.

Trying to protect the assets that you perceive as yours or highly valuable is a common strategy, but it is often fraught with difficulty. Some people want to lay claim to assets that they rightfully need to share with their spouses. Other people make minor mistakes during their marriage that could have financial implications in the divorce.

Is it possible to get an annulment in Pennsylvania?

If you are married and considering a separation, you may be reluctant to file for divorce for financial, legal or religious reasons. In some cases, there are other options. You may be able to go through a legal separation, or you may be able to terminate your marriage by going through a civil annulment.

Annulments are subject to state laws, so it is important to observe what the law says in the state in which you intend to terminate your marriage. In Pennsylvania, it is possible to invalidate a marriage by going through an annulment, but only in certain circumstances. The following blog will give an overview of when an annulment is possible in Pennsylvania.

Looking at the whole picture before getting a strategic divorce

Most people are interested in ways that they can save money, but not everyone is interested in putting their marriage on the line to do so. However, the so-called 'marriage penalty" has some high-earning Pennsylvania couples talking about using a strategic divorce in order to save money on their taxes. The Tax Cuts and Jobs Act subjects high-earning couples to a higher tax liability when they file taxes jointly.

Despite the fact that strategic divorce can be used to help some couples save money, there are several downsides that a couple would want to consider to make sure they are not saving money in one area and then losing money or paying out a lot of money in another area. For example, one spouse may use health insurance that comes through the other spouse's employer. If a couple were to divorce, private health insurance policies can be expensive, up to $12,000 per year.

Factors in buying the marital home from the spouse after divorce

Pennsylvanians who are getting a divorce will need to consider many factors. In particular, property division can be significantly complex. One issue that is rife for dispute is splitting the marital home. If the parties are agreeable to a negotiation, a buyout is a viable strategy to avoid a long-term battle over ownership.

When thinking about a buyout, calculating how to go about it is essential. Home value might be the first thing people think about, but the equity is the gauge for how much to pay in a buyout. A house worth $250,000 with a mortgage of $100,000 leaves the parties to split the $150,000 equity. An accurate appraisal is important to get the home's market value. Comparable properties, the condition and more will be used to determine its value. Each party has the choice of getting their own appraiser or agreeing on an appraiser.

Prenuptial agreements are important for couples blending families

If two people who have children from a previous relationship meet and get married, their family becomes what is known as a blended family. Blended families are common these days, but they do represent unique legal considerations for the spouses, particularly if the union ends in divorce.

For example, custody and support rules are different when both spouses are not the biological parents of the minor children unless the stepparent legally adopted the children. Confusion about obligations and responsibilities when a blended couple chooses divorce can cause major legal headaches for the whole family.

Preparing for post-divorce finances

The financial aftermath of divorce sometimes leaves people in Pennsylvania struggling to pay bills. Even people with relatively high salaries often go through an adjustment period when shifting from a two-income to a single-income household. A divorce might add new expenses, like spousal or child support, as well. Regardless of their income level, many people have to overhaul their budgets after a divorce. A proactive approach helps to mitigate these financial challenges. Post-divorce budgets should focus on meeting monthly expenses, attacking debt, and building an emergency fund.

Sometimes people find that they need to adjust their lifestyles to meet their expenses on a single income. If they have debts, then they need to make paying them off a top priority. This might require them to go without luxuries so that money can be directed toward debts. Refinancing debts into a single lower-interest loan could aid this effort. Budgeting might include paying for health insurance. Someone previously covered under a spouse's health plan will need to obtain coverage. Learning new skills to get a better job or picking up a side hustle present ways to increase income and offset the challenges posed by debt and the high cost of health insurance. People should also find out how the divorce influences their tax filing status.

Special considerations when creating a parenting plan

One of the hardest parts of any divorce in Pennsylvania that involves children will usually be agreeing on terms for custody with your ex. However, in recent years, the courts have moved away from the old primary custody and visitation model. Instead, because they want to do what is in the best interest of the children, the courts these days prefer shared custody arrangements.

You and your ex can play an ongoing role in the life of your children. You can create a parenting plan that guides you both as you adjust to a future working together as divorced co-parents. There are certain special concerns that you may want to give due consideration while creating a parenting plan.

What to do after being denied visitation

Pennsylvania parents and others who are denied the right to visit with their child may eventually be able to obtain the right. The first step toward doing so is to determine why visitation rights were denied. For instance, a judge may have felt that a parent could put a child's emotional or physical health in jeopardy. In some cases, parents will be asked to attend parenting classes or a rehab program before they can see their children on a regular basis.

There is a chance that the child's other parent will deny an individual the ability to see his or her children. A custodial parent may assert that the noncustodial parent is abusive or doesn't have reliable transportation. Custodial parents could also cite a lack of financial support as a reason for denying visitation. However, this may not hold up in court as the law tends to see visitation and child support as separate matters.

Indications that a soon-to-be ex-spouse is hiding money

Pennsylvania residents may be familiar with the gender stereotype of a greedy husband hiding away money to prevent his soon-to-be ex-wife from getting her hands on any of it. This outdated assumption is inaccurate and can be potentially disastrous for husbands going through the divorce process who are interested in a fair divorce settlement.

Hiding marital assets from a spouse is illegal, but it is also a reality. It is common for both men and women to do this if they have the means and motivation. Both men and women who are in rocky marriages where divorce is looming should be aware of these red flags that may indicate that one party is hiding assets.

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Michael E. Eisenberg Attorney At Law

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