Although inflation may have driven the cost of everything up recently, divorce has never been cheap. Most people realize that court costs and legal fees will take a little bit of a bite out of their wallets during the process.
It’s not the legal fees, however, that may end up costing you the most. There are “hidden” expenses that go along with divorce that many people don’t realize are there – until they come up against them. They include the following.
Taxes and fees associated with dividing investments
If you need to divide retirement accounts and investments with your spouse, you need to be wary of things like asset valuation costs, early withdrawal penalties, capital gains and income tax on distributions. Although it means more expense, it may be worthwhile to consider hiring a financial advisor to figure out the most financially prudent method of proceeding.
Moving costs and setting up a new place
Divorce usually necessitates a change in living arrangements, and moving comes with a lot of expenses. You have to pay a deposit on a new place, hire movers, get new furniture to replace anything your spouse got in the split and set up your utilities. These expenses can add up quickly, especially if you didn’t anticipate them.
Refinancing property and debt into your own name
Ideally, you don’t want any remaining financial ties with your spouse once the divorce is over. If you have jointly-held vehicles or real estate that you want to keep, you may have to refinance them so that your spouse’s name is removed from the loans. The same goes for any credit card debt that becomes yours in the split.
Emotional spending and retail therapy
A little retail therapy may be perfectly normal after you’ve been through a trying time – but you need to put yourself on a budget so that you don’t go overboard.
The best way to shield yourself from unexpected expenses is to learn more about how divorce works, what to expect in the coming weeks and how to best protect your interests. Seeking legal guidance proactively in this regard is wise.