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Financial impact of divorce

Divorce can strain one's finances, but it is possible to plan for the potential monetary ramifications of divorce. Texas residents may wish to know important financial concerns when dissolving a marriage.

One of the biggest assets a couple might share is a house. When selling a house, any profits or debts must also be distributed. A couple could split proceeds evenly, or spouses may need to negotiate if one spouse needs or feels entitled to a larger share. One or both partners might be responsible for expenses before the home sells.

If one spouse keeps a house, this person might also receive any debt associated with the home. This could involve refinancing a mortgage, but it is important to note the limitations of a divorce decree. While one person may assume the responsibility for paying off a debt, the other party could still be liable for a debt and face collection efforts if the first person stops making payments.

When it comes to property division during a divorce, there could be many assets that are subject to division. This might involve stocks, mutual funds, retirement accounts, real estate investment trusts and more. If a spouse is entitled to a portion of assets like a pension, a divorce agreement may need to stipulate whether survivor benefits apply.

After a divorce, both parties might need joint tax returns for the past five years. When sharing custody of children, parents may need to discuss who will claim the children as dependents. Paying or receiving alimony or child support can influence one's income, which could have tax consequences.

Spouses typically own marital property equally but questions may arise about what constitutes marital property. Joint property generally refers to assets acquired during a marriage. This may include income, business assets and purchases. An attorney may be needed for property division matters.

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