Divorce is a comprehensive adjustment to every facet of your life. What you do each day, where you live, how you navigate problems, and how you build your financial health for the future are all very different now. As you approach divorce or begin to navigate your new life throughout this process, it is critical to consider where you are headed. Finances after divorce in New Jersey look very different, but with a plan, you can both protect and rebuild your financial well-being.
At Zeigler Law Group, LLC, we work with people navigating divorce to provide the best possible way forward. We listen, guide, and support you in post-divorce financial planning. In fact, if you are just starting on the path to divorce, planning for your financial future begins now. Let our legal team guide you through that process.
Create a Realistic Post-Divorce Budget
As we begin to develop a plan for divorce, one of the key areas to consider is your financial future. Specifically, you need to consider what your post-divorce financial life looks like. We work with clients to help them assess their new financial reality. That means considering the debts you will still owe, the income you will have, and the objectives you have for your future. To build towards your goals, you need to create a sustainable budget now.
A post-divorce budget must consider how you will manage everyday expenses on a single income. That will differ for every person, based on factors such as the following:
- Alimony Responsibility: Will you receive or pay alimony? How will that impact your cash flow each month?
- Child Support: Will you pay or receive child support? What is the value of that support, and how will it change over time as your child gets older?
- Rent and Mortgage: What are your living arrangements likely to be in the months after divorce? What about in the years later? How will you move towards building your goals in terms of where you will live?
- Insurance: Considerations for insurance costs, including for assets, but also for life insurance
Consider all your monthly expenses now and which ones will likely remain after the divorce. A component of post-divorce financial planning is understanding your expectations for savings and retirement planning.
Protect and Update Financial Accounts
The next factor to consider is protecting your financial well-being. There are several steps to take that our legal team will help you manage:
- Close joint accounts. Any type of account shared will need an alternative solution. Determine what monthly bills currently come from each account so that you can create an alternative payment strategy for them.
- Set up new financial independence. Establish new accounts for yourself. Be sure to name new beneficiaries on those accounts. Choose new passwords and usernames that your ex will not be able to guess.
- Update all beneficiaries across all of your financial plans. That includes your retirement accounts and life insurance accounts. Your attorney can help you pinpoint any such accounts that may need updates. Do not overlook savings and investment accounts.
- Estate planning updates are paramount. Your estate plan will need to be updated to reflect your new financial reality, your current earning and savings abilities, and your objectives for life after retirement. Be sure to discuss new strategies with your estate planner that align with your age and financial objectives.
Make Smart Tax Moves After Divorce
Another focus is on New Jersey divorce and taxes. There is not a single strategy that applies to every person or situation. Rather, you will need to work with your tax accountant to clarify strategies that work for your new financial situation. Divorce will impact your tax return, including the credits and deductions you qualify for, your tax bracket, and your expected contributions.
Be sure to talk to your tax professional about factors such as:
- How your payment or receipt of alimony impacts your tax obligations.
- Your dependent scenario and how that plays a role in planning for tax obligations at the end of the year (who will claim children as their dependents, for example).
- Property transfers and the risk of capital gains taxes are another factor to discuss to determine if there are methods to reduce tax risk.
- Filing status changes, especially if you were filing as a married couple, could change your financial obligations considerably.
Your finances after divorce in New Jersey will become very complex when you consider tax obligations. Your income, expenses, and overall investment strategies impact how you pay taxes. Working with a tax professional minimizes the risk of mistakes.
Retirement Planning for Your Future
Your life looks different now and will continue to do so well into the future. Divorce can dramatically alter your retirement timeline and your contribution strategy. Your lawyer will help you reassess your current situation and make adjustments to your savings strategies. It is a good idea to work with a financial expert early in this process to structure settlements, ensuring that long-term financial stability is always a consideration.
There are rules and court-required decisions regarding retirement assets that vary on a case-by-case basis. That includes QDROs, pensions, and 401(k). Again, each situation is a bit different, but minimizing the financial impact of liquidating these accounts is something your lawyer and financial planner can help you do.
Plan for Real Estate Decisions with Confidence
You may be selling your marital home, buying a new one, or moving in a different direction. Our legal team will help you understand the financial and legal implications of all decisions. You will know what your options may be and the responsibilities you will have and lose to mortgages, titles, and equity distribution.
New Jersey’s Award-Winning Divorce & Family Law Attorneys
For over 25 years, Sonya K. Zeigler, Esq. has been a fearless advocate in various divorce matters. Her LL.M. in Taxation equips her with a unique blend of financial acumen and legal prowess, making her a standout in the field. Sonya’s niche lies in handling complex divorces, where she often represents business owners, entrepreneurs, and individuals with high assets.
From budgeting after divorce to navigating complex factors related to alimony and taxes in NJ, our legal team is always available to guide you through the financial aspects of divorce. Our firm has advanced experience in divorce-related financial issues and collaborates with tax advisors, real estate professionals, and Certified Divorce Financial Analysts (CDFA®s).
Work with the Toms River Divorce Lawyers at Zeigler Law Group, LLC
Set up some time to speak to us to discuss how we can help you create a strong financial foundation for your next chapter. Call the Toms River divorce lawyers at Zeigler Law Group, LLC at 732-361-4827 or contact us online now to schedule a free consultation. Located in Toms River, Red Bank, Princeton, and Mount Laurel, New Jersey, we serve clients in Ocean County, Monmouth County, Mercer County, and Burlington County.