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Protect financial assets in a Texas divorce

Monday, July 16, 2018

When deciding to end a marriage, most people recognize the emotional toll it will take on them. However, many do not thoroughly address the impact a Texas divorce will have on their finances. In fact, national reports show that, while women experience a 41 percent decrease in income following a divorce, men see a 23 percent decline. Though divorce is certainly a significant event, experts stress that it does not have to destroy someone's financial position. They recommend certain actions that will protect one's finances when going through a divorce.

Financial experts stress the importance of understanding how much money is actually going in and out of a bank account by knowing earnings and expenses for all parties involved, then evaluating how the divorce will affect all of those items. In most cases, income will decrease and steps may be necessary to replace it. Selling bigger assets or getting a side job may provide extra needed cash.

If someone is close to retirement age when the divorce occurs, it is important to protect investments for the future. Financial planners stress the need for choosing investments for the greatest yield. Also, the timing of starting Social Security benefits may be affected by the decision to divorce. The benefits may be needed to provide a stable income after a divorce is final.

Since Texas is a community property state, marital property is divided equally in a divorce. This includes retirement assets, such as a 401(k). A qualified domestic relations order can be used to grant a portion of one spouse's retirement account to the other. Financial planners stress the importance of understanding all the tax implications of any division of assets. It is also imperative to update the beneficiary designations on any accounts to ensure that the appropriate people are included in an estate.

There are many factors to consider when going through a Texas divorce. It would be beneficial to talk with a knowledgeable attorney when contemplating divorce proceedings. An experienced lawyer will work with a client to achieve the best possible outcome in the process.

Source: News OK, "Don't Let Divorce Ruin Your Finances", Arielle O'Shea, June 23, 2017

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