How Can a Divorce Benefit Me Financially?

 Posted on July 26, 2021 in Divorce Finances

One of the most common causes of divorce in the United States is finances. In fact, almost 40 percent of married or partnered couples say that money causes heavy stress in their relationships. While money problems can contribute to divorce, they can also be one of the reasons why unhappy couples stay together. The thought of going from a two-income household to a one-income household can be daunting, as can the thought of dividing up assets, property, and marital debt.

While divorce can result in some financial issues that an individual may need to adjust to, there are several areas where your financial situation may actually get a boost following a divorce. If you are considering a divorce but are concerned about how you will be financially impacted, a Kane County divorce attorney can help.

Financial Independence

Getting divorced comes with many financial challenges, including the need to divide assets and ongoing alimony and child support obligations. However, one silver lining is that after the divorce is finalized, you will have the freedom to make many financial decisions independently of your former spouse. Instead of arguing over which bill should be a priority or what you or your spouse should or should not spend money on, you will be in total control. Whether you want to pay off debt, save towards a new vehicle or a trip, or add more to your savings account each month, you will now have the freedom to make those decisions without someone else disagreeing with you. There can also be a significant easing of financial burdens if your spouse has an addiction issue, such as substance abuse, gambling, or shopping addiction.

More College Aid

Divorced parents can find it hard to fund their children’s higher education, but children of divorced parents do have access to some benefits when it comes to how much financial aid they will receive for college compared to how much they would receive if their parents were still married. This is because the Free Application for Federal Student Aid (FAFSA) only requires one parent’s income information, which may help the student remain eligible for certain kinds of grants and loans. Keep in mind, however, that a parent who receives child support or spousal support will need to report it as income on the FAFSA application.

Penalty-Free Retirement Account Transfers

When spouses contribute to retirement accounts during their marriage, those accounts usually become part of the marital estate and may need to be divided between the two spouses in order to achieve an equitable distribution. Usually, when funds are withdrawn from a retirement account before the owner reaches a certain age, they are subject to early withdrawal penalties and income tax consequences. However, a divorce order or qualified domestic relations order (QDRO) can allow for the transfer of retirement assets from one spouse to the other without incurring these consequences.

Social Security Benefits

For married couples, Social Security retirement benefits may be available for both spouses based on only one spouse’s work history. Though a divorce can eliminate eligibility for spousal benefits, those benefits may still be available to a divorced spouse when the marriage lasted at least 10 years. Spousal benefits may even be available for divorced spouses sooner than they are for married spouses, because divorced spouses do not have to wait for their former spouse to retire and file for their own benefits. Rather, they only need to wait until they and their former spouse have both reached the age of 62.

Contact an Aurora Family Law Attorney for Legal Help

If you are considering divorcing your spouse, a seasoned Kane County divorce lawyer can help you make sure your financial interests are protected. Call the Law Office of Matthew M. Williams, P.C. at 630-409-8184 to schedule a confidential consultation and find out what legal options are available for your situation.

Sources:

https://studentaid.gov/

https://www.ssa.gov/forms/ssa-2.html

https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=004000050K1-119