Here are some of the ways divorce affects your finances.
Marriage is just as much a financial relationship as an emotional one. Notably, the financial consequences of divorce go beyond the question of who gets the house and other assets in Maryland. The economic implications of divorce can impact you for years. It’s essential to understand your financial situation if you’ve decided to part ways with your spouse to make informed decisions and safeguard your assets. Here are some of the ways divorce affects your financial situation.
Division of Property
Whatever property or assets one spouse acquires during a marriage, regardless of title, is considered marital property in Maryland and belongs to both spouses. Under the state’s equitable distribution laws, marital property must be divided fairly when a couple divorces.
Dividing marital assets is a significant financial consequence of divorce, especially for long—term couples. In a long-term marriage, spouses may acquire substantial property that must be divided, including real estate, bank and retirement accounts, vehicles, furniture, business interests, and investments.
Debts
Just as marital property in Maryland must be divided, debts — such as mortgages, car loans, and credit card debt — are also considered when marital property is divided. If the Court transfers a house or awards a car to one party or the other, the Court will transfer these assets while considering the underlying debt. This often requires the spouse receiving the asset to refinance or otherwise assume sole liability for the underlying debt. If an unsecured marital property has a debt, such as a TV, computer, or something else financed, the Court will transfer that property to the person responsible for the debt.
Division of Retirement Assets
Retirement funds accumulated during the marriage are classified as marital property and subject to division when spouses divorce, even when those assets are only in one party’s name. This can significantly impact one’s financial security and standard of living after divorce. There may also be early withdrawal penalties and other tax implications when transferring retirement assets if the transfers are not addressed appropriately and in a tax-advantageous manner. Sometimes, a spouse might have to postpone retirement if a significant portion of their retirement account is allocated to the other during the divorce process.
Lawyer Fees and Court Costs
Lawyer fees and court costs can quickly add up in a litigated divorce. However, it’s essential to understand that alternative dispute resolution methods, such as mediation or collaborative divorce, can lessen the time it takes to divorce and reduce the overall costs. Mediation and collaborative divorce are non-adversarial and may help you avoid lengthy court proceedings. These out-of-court process options encourage spouses to work together to reach a divorce agreement amicably.
The Right Lawyer Can Make All the Difference
Hiring a lawyer should be the first thing you do when encountering any legal matter, not a last resort. Whether you’re thinking about a separation or divorce or have been charged with a crime, been injured in an accident, or your civil rights have been violated, you need to first know your rights. Contact Mike Mastracci today at 614 Edmondson Ave Catonsville, MD 21228 (with satellite offices in Ocean City, Snow Hill, and Salisbury, Maryland), 410-869-3400, and check us out on Facebook.