There is never a good or easy time to file for divorce. You can second guess yourself for a long time, contemplating the right week to move forward, or even be conflicted about whether divorce is the right choice for your family for a long time before you act. You and your spouse might have a good week and you begin to question your decision, or you feel concerned about managing finances on your own, so you tell yourself that you can make your marriage work with more effort. However, most of the issues that are causing you to contemplate divorce may never go away and could be the reasons you ultimately choose to end your marriage.

In this post, we detail top financial and living considerations in the divorce process and address top questions you likely have that might help you decide when and how to file for divorce.

Financial Considerations

While divorce is primarily an emotional decision, it’s important to understand the financial impact of your filing date.

After Filing for Divorce: Once you have officially filed for divorce, the court will officially begin to oversee your finances. This is sometimes referred to as assets being ‘frozen’. In reality, finances are not frozen, life can continue as usual, and parties can spend the ‘status quo’ such as buying groceries and covering regular needs. Anything out of the ordinary, such as transferring funds to a separate account, requires notifying the other party and may require their approval (which might include a discussion with legal counsel). Beneficiaries on retirement accounts or life insurance policies can not be changed without permission. Both parties will be held accountable to the court to ensure marital funds are not being ‘wasted’ and a standard of complete transparency is expected. Asset and debt accumulations will continue during this time and will be updated throughout the divorce process. Due to these continual updates, generally speaking, the official financial stopwatch does not end until a divorce agreement has been made or the parties are given permanent final orders. Depending upon how long your divorce takes, it is important to consider future big bonuses, financial milestones, job changes, larger purchases, or big expenses that you have coming your way and how those might impact your decision of when to file. 

Social Security: Social Security is another financial consideration, especially if one spouse hasn’t been working or you have a significantly lower historical earnings record. After a divorce, you can collect Spousal Social Security benefits based on a former spouse’s earnings record. The spousal benefit is 50% of your ex-spouse’s benefit if that amount is greater than 100% of your own social security benefit. In order to meet the requirement to receive this benefit, you must have been married to your spouse for 10 years or more, you must be at least 62 years old (to receive a reduced social security benefit), and you cannot currently be married/remarried. If you get divorced when you are 50 years old, you can still receive the Spousal Social Security benefits when you reach the age of 62, as long as all the other criteria are met. This is especially important if one spouse stayed home with children while the other spouse generated most of the income. Even if your ex-spouse remarries (and possibly receives a spousal benefit), as long as you have met the above requirements, you can still claim a spousal benefit on your ex-spouse’s social security record.

State Laws: Consider state laws that are specific to your area. These may detail unique requirements around asset division, spousal support, and/or child support. In almost every state, the age of your children and the length of your marriage will influence the total dollar amount of your spousal or child support obligations.

Taxes: Taxes and filing status will be impacted by the time of year you file.  As a reminder, your tax filing status is determined by your marital status on the last day of the year. That means that if your divorce is final on December 31, then you will be filing non-married for the tax year. Because there are benefits to filing jointly, including more tax credits, this is a significant consideration from a financial perspective. In Colorado, a required waiting period of 90 days after filing must be met before a divorce can be finalized.

Living Considerations

Financial and living considerations are closely related. Living considerations may be incredibly important if your divorce involves children or a parent who is a primary caregiver. In some cases, one spouse may have left or moved out to reduce the conflict, but decisions on the home and living considerations will still involve both parties.

Here are some questions you may want to ask yourself and/or discuss with your spouse to provide clarity on the best living situation for your family post-divorce:

• Does one party want to stay in the home?
• Could one parent refinance the house and are rates favorable to do so?
• If one party can refinance, is there enough equity in the home that could be available to the other spouse if needed for their new living arrangements?
• Will the house need to be sold from a financial perspective? 
• Is it a good time to sell? How is the real estate market? Will we make money if we sell now?
• Is now a good time to find new housing? Is the housing market in a place where both parties can easily move out and find new living arrangements?
• If we sell, is each person’s credit strong enough to get a house and car on their own?
• Is the economy strong enough for a non-working spouse to find a job and afford a place to live on their own?
• Is it better for the children if the home is retained or sold?
• Will potential new living arrangements force the children to change schools and be required to build new social connections and support? 
• Are there any future repairs that are needed and how will they be paid for if the home is kept or sold?
  

Answering these questions may help you understand whether you and your spouse see eye to eye about what should happen with the house. If there is not a strong consensus, you’ll work out these details in your divorce process, whether you choose to hire attorneys, use a mediator, or work in a collaborative divorce setting. 

External factors like the job market, real estate market, and interest rates will undoubtedly impact your divorce. Considering these key factors relative to when you file could reduce friction in the divorce process and provide more options to help settle your case as amicably as possible. 

Other Considerations

Many parties fail to understand that it doesn’t matter who files for divorce. It does not impact the decree and there is no benefit to being the Petitioner or the Respondent. In fact, some parties even file as Co-Petitioners. In this “joint filing” scenario, you both sign the paperwork and you avoid the need to have the other party “served” papers which has both financial and emotional benefits.

However, if your spouse is dragging their feet and not acting on your desire to file jointly for divorce, or if you are stuck in a loop of unsuccessful reconciliation, you can force the divorce  by filing and having paperwork served to your former spouse. This is also a good idea if your spouse is physically, emotionally or financially abusive as it provides you some level of protection.

Finally, it’s natural to consider holidays, existing commitments (weddings, anniversaries, graduations, vacations, reunions, etc), and major milestones when you choose your filing date. For this reason, January is often “divorce month” as couples feel that post-holiday timing might be better for everyone involved, especially children. January filing can also make financials cleaner as you have access to end of year statements.

At A.M. Financial, we can help you evaluate the best time to file and help you plan accordingly. We can work closely with you and determine which considerations are the most financially significant so you can make the best decisions for your family. Contact us for a free consultation where we can learn more about your unique situation and further explain how our services can help.