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League City Family Law Blog

How divorce impacts a person's finances

A divorce may cause emotional pain, and for women in Texas, the financial ramifications may be even more significant. This is because the typical woman makes 81% of what a typical man makes in a given year. Furthermore, women are more likely than men to obtain custody of their children. However, there are steps that individuals of either gender can take to ensure that they are as financial secure as possible before, during and after a divorce.

Prior to getting divorced, it can be a good idea to gather bank, credit card and other financial statements. Individuals may also want to open bank accounts that only they know about so that they have money to pay for their divorce. If possible, they close all joint accounts to ensure that the other spouse isn't able to accumulate new debt that both parties to a marriage could be responsible for.

Pros and cons of a strategic divorce

Some couples in Texas might wonder whether they would benefit from what is sometimes called a "strategic divorce." In a strategic divorce, a couple splits on paper in order to save on taxes or to help one spouse qualify for Medicaid. A divorce could also mean that there is more financial aid available for a child's college education. However, there are a number of potential drawbacks.

In many marriages, both spouses are insured through one spouse's health insurance benefits. A divorce could mean having to pay thousands of dollars in insurance premiums. A spouse who does not work outside the home would also lose the ability to get retirement contributions in an IRA. Furthermore, while a spouse must sign a waiver to allow someone else to be named the beneficiary on a 401(k), after a divorce, this is no longer necessary. Even in an amicable arrangement, there might still be a danger that after a major conflict, the ex-spouse could be removed as beneficiary. The couple might also be required to split a retirement account using a document called a qualified domestic relations order.

Setting boundaries with a difficult co-parent after divorce

Texas parents who have been through a divorce may face further challenges if they have a difficult co-parent. Unfortunately, divorce does not always mean an end to conflict, particularly when parents may need to maintain some kind of a relationship for years. However, there are steps a parent can take to set boundaries with the other parent if necessary.

In some cases, one parent may manipulate the other one into arguments. It is not possible to control another person's actions, so parents must learn to manage their own. They should recognize the patterns they tend to fall into in these cases and refuse to engage. They should also keep in mind that they can wait to respond or not respond at all to the other parent. Communication can be limited to matters involving the children. Parents may also want to think about blocking an ex-spouse on social media and only agreeing to communicate in one way. For example, they might use only email. There are also online portals and other software available to facilitate and document communication between divorced parents.

Fathers more likely to get custody than in previous decades

In 1980, a Texas father might have been unlikely to get custody of his children in his divorce. Nationally, in 80% of custody cases, mothers got sole custody. By 2008, this only happened 42% of the time. Situations in which both parents had the child about half the time went from 5% to 27%, and those in which custody was joint but for unequal parenting time went to 18% from 3%.

This shift happens as more women went to work outside the home and as men were encouraged to spend time with their children. More custody cases are also happening between unmarried parents as the number of children born out of wedlock grows. In general, courts treat these cases no differently than they would those in which the parents were getting a divorce. In the past, a father with less money might be at a disadvantage, but this is no longer the case. Another major change is that parents are encouraged more to work out a child custody agreement through mediation instead of going to court.

Keeping the home in a divorce

Dividing property in a divorce is rarely a simple process, and dealing with a house is no exception. If one person in Texas plans to buy out a spouse and keep the home, there are several considerations to keep in mind.

First, it is necessary to determine how much equity each person has in the home. Next, an appraiser should determine the home's market value. In some cases, each spouse might want a separate appraiser. In the best-case scenario, their appraisals will be similar. If they differ significantly, the couple may need to hire a third appraiser to resolve this. The spouse who is keeping the home may also want to hire a home inspector to check the property. If significant repairs need to be made, the spouses will need to decide how they will pay for this.

Coping with common financial challenges after a divorce

Ending a Texas marriage usually results in financial challenges as former spouses rebuild their individual lives. People who once shared incomes and expenses must live off single incomes while sometimes paying debts and new expenses like child support. Careful budgeting and lifestyle adjustments typically help people make the transition, but they must give particular attention to health insurance, tax filing status and building credit.

Health insurance represents a big expense, especially for someone previously covered by a spouse's health plan. Someone who will lose coverage in a divorce might have it available through an employer. If not, the person might qualify for subsidies when buying insurance through the Affordable Care Act exchange. For people who have health coverage, they should make sure that their plans are no longer covering former spouses unless a divorce settlement requires it.

There are a few living options during a divorce

When a Texas couple is going through a divorce, there are still questions that remain. One of the major things that still needs to be decided is where to live during the process. This is a matter of emotional, financial and practical balance. The three primary options for most people are to stay in the family home, buy a new one or rent a place to live.

Leaving the family home can be emotionally difficult, especially in cases where children are involved. There can be value in keeping this aspect of life consistent while other aspects are changing. Individuals who decide to stay in the home should keep a detailed log of all costs related to upkeep, including cleaning, utilities, maintenance and taxes. These costs may be relevant during the property division phase of the divorce.

Warning signs for hidden assets during a divorce

Texas couples who were once brought together over a deep romantic connection may find that their relationship turns sour over the years, leading to bitterness and even hatred. In some cases, this can manifest in bitter fights during a divorce. Spouses may battle over their wealth and assets, with each party making a case for why he or she deserves more. These battles may be especially pronounced for couples who have accumulated a significant amount of wealth over time. Unfortunately, a drawn-out process can deplete the wealth held by both parties. However, some spouses may resort to unethical methods in an attempt to claim a greater share of property in the divorce.

There may be a higher risk of one party hiding assets if a couple has a significant disparity in wealth. The higher-earning partner may be far more likely to manage all aspects of a couple's finances. During the divorce, the other partner may be tempted to rely on their spouse for information about family assets, investments and accounts. They may not know where to look for assets that may be missing and unreported. However, there are certain warning signs that could indicate that one spouse is attempting to keep property out of the divorce.

Researchers find many divorces happen for emotional reasons

Among the main reasons that some Texas coupled are getting a divorce are a lack of communication, a decline in trust or simply growing apart. These were among the reasons cited in a study that appeared in the Journal of Sex & Marital Therapy, prompting researchers to speculate that people are increasingly seeking emotional fulfillment in marriage. In fact, they point out that emotional and psychological reasons may have overtaken behavioral reasons, such as addiction, in prompting divorce.

A lack of love in the marriage was the reason given for a marriage ending by 47% of people. In second place, 44% said poor communication caused their divorce. In third place, people said their marriage ended because of a loss of trust or respect. Some research reports that respect is more important than love in maintaining a healthy marriage. In fourth place, people reported that they no longer shared the same goals or values despite years together.

How to approach social media in a divorce

People in Texas who spend more time on social media might have unhappier marriages. This was the finding of a Boston University study that found a link between social media usage and the quality of marriages. While married and even when contemplating divorce, people should avoid posting negative things about a spouse online. They may want to consider reviewing past posts and privacy settings. They may also want to remove people from the contacts list who are likely to cause problems.

Once the divorce is underway, this policy of discretion should continue. It can be tempting to vent about a spouse, but this is best done to family and friends offline. If a couple is divorcing amicably, they might want to make an agreement about when they will announce it on social media. Parents who are concerned about the privacy of their children may want to include guidelines in divorce paperwork about discussing them or posting their photos on social media.