Perhaps you are contemplating divorce and the recent economic and health concerns have you questioning what you should do. We simply don’t know how long the COVID-19 will cause a major shift in every aspect of our lives, including our financial security.
By Kristina George, CPA, Certified Financial Planner ® and a Certified Divorce Financial Analyst.®
She currently sits on the Board of Directors of the New Hampshire Collaborative Divorce and is a member of the International Academy of Collaborative Professionals. She has participated in collaborative practice since 2012. Kristina has provided tax, financial planning, and investment advice to individuals and business owners for over 24 years. Additionally, Kristina works extensively with lawyers, mediators and clients to address financial issues that arise in the divorce process. Kristina can be found at Northstar Financial Planning, Inc. in Windham, NH.
Divorce is often a financial strain. In addition, the current pandemic may result in lost income and potential job loss. If you or your spouse are likely to lose income, you may question the timing of your divorce. Will you both be able to pay rent? Buy groceries? These additional expenses for supporting two homes can be minimized if you are creative and flexible. Even without a divorce, many people will need to creatively reduce their housing and living expenses in the age of the coronavirus.
If you or your spouse are losing income, this will affect the amount of child support awarded. When either of your incomes increase or decrease, your child support will be? adjusted accordingly.
Spousal Support is normally established with a set amount, start and end date. This can be tricky in a time of economic and income uncertainty. Yet, the determination of spousal support is not much different than pre-coronavirus world. It is set based on each person’s income and income potential. If the payer has a diminished ability to pay, a lower amount will be negotiated, or the payer will file a modification with the court until their income recovers.
If your wealth is held in investments, you may have already experienced a substantial drop in the value of your assets. Should you stall the divorce until the coronavirus economic effect has passed? Since investments and retirement accounts are generally equally divided, a market decline would not be a reason to postpone your divorce. If you split the devalued portfolio, each of your accounts will similarly increase in value when the market recovers. This may even be an opportune time to update your investment allocation based on your new circumstances and amount of market risk you’re willing to take on.
Hopefully, the current climate inspires more people to approach their divorce in a cost-effective, resourceful manner. The collaborative divorce process provides the family with a team of professionals to help educate, support and guide you though these difficult decisions.
Many states including NH have postponed in-person hearings and the courts have closed lobby service. We don’t know what the future holds and how long this situation will last. It’s unsettling to feel out of control of so many facets of our lives. Taking control of your divorce process can be one way to feel that you’re moving forward productively and thoughtfully. Having the support and expertise of your divorce team is critical, now more then ever.