Ending your marriage can have a significant financial impact on your life. However, there are steps that you can take to minimize the damage that a divorce might have. For instance, if there is equity in the Texas home that you and your spouse own together, it may be a good idea to sell that house. You can then use the proceeds from the sale to finance a comfortable lifestyle as a single person.
You may be entitled to spousal support
Selling the family home may not be the only way to generate income after a divorce is final. Depending on the facts of your case, it may be possible to obtain maintenance payments from your spouse. These payments are designed to ensure that you can pay housing, transportation and other basic expenses until you’re able to provide for yourself. It’s possible that your spouse will be required to make these payments on an indefinite basis.
Make sure to split retirement accounts properly
If you are to receive a portion of your spouse’s retirement account, there are methods of dividing it without triggering a taxable event. If your spouse has a qualified account such as a 401(k) or 403(b), it must be divided per the terms of a qualified domestic relations order.
In the event that your spouse has an IRA, you must wait until the divorce is finalized to receive your share of the account without triggering an early withdrawal fee. It’s worth noting that this penalty does not apply if you’re over the age of 59 1/2. Furthermore, you generally don’t need to pay income taxes on money transferred directly into a new IRA or 401(k).
Ideally, you’ll start thinking about your financial future the moment that you know that your marriage is coming to an end. This may help you determine if a settlement offer is worth accepting. It may also help you determine if you’ll need to sell assets, get back into the workforce or take other steps to live your preferred lifestyle.