Divorce is a challenging and emotional process that can have significant financial implications. If you are going through a divorce in Tennessee, planning for the financial ramifications is crucial to ensure a stable future. With that in mind, a Murfreesboro divorce attorney at Bennett | Michael | Hornsby discusses how to plan for the financial ramifications of divorce in Tennessee.
Understand Tennessee Divorce Laws
Before you start planning, it is essential to understand the basic divorce laws in Tennessee. Tennessee is an equitable distribution
state, meaning the court will divide marital property fairly, though not necessarily equally. “Marital” property refers to assets acquired during the marriage, while “separate” property refers to assets owned prior to the marriage and those inherited during the marriage. Keep in mind, however, that separate property can become marital property if it is co-mingled during the marriage.
Gather Financial Documents
The first step in preparing for the financial impact of divorce is to gather all relevant financial documents, including things such as:
- Bank statements
- Tax returns (at least three years)
- Pay stubs
- Mortgage documents
- Retirement account statements
- Credit card statements
- Insurance policies
- Investment account statements
Having these documents organized will help you and your attorney get a clear picture of your financial situation.
Evaluate Marital Assets and Debts
In Tennessee, marital property and debts are divided equitably. Make a comprehensive list of all assets and debts. Assets include real estate, vehicles, jewelry, and retirement accounts. Debts include mortgages, car loans, credit card balances, and any other liabilities. Knowing the value of these assets and the extent of your debts will be crucial in negotiations and court proceedings.
Consider the Family Home
One of the most significant financial decisions in a divorce involves the family home. Decide whether it makes sense for you to keep the home, sell it, or have your spouse buy out your share. Consider the mortgage, maintenance costs, and your ability to afford these expenses on your own. Selling the home and splitting the proceeds might be the best option for a clean financial break.
Plan for Child Support and Alimony
Child support and alimony (spousal support) are critical components of divorce settlements. In Tennessee, child support is calculated based on both parents’ incomes and the amount of time each parent spends with the child. Alimony is determined by factors such as the length of the marriage, the standard of living during the marriage, and each spouse’s earning capacity. While both parents are legally obligated to contribute to the support and maintenance of a minor child, meaning that child support will be part of your divorce if you have minor children, alimony is not always awarded. If you are requesting alimony or believe your spouse will do so, be sure to discuss the topic with your divorce attorney.
Protect Your Credit
Divorce can negatively impact your credit score if not managed carefully. Close joint credit accounts to prevent your spouse from accumulating debt in your name and open individual accounts to establish your own credit history. Monitor your credit report regularly to ensure there are no unauthorized charges or mistakes. If possible, you should also build an emergency fund to cover unexpected expenses, aiming to save three to six months’ worth of living expenses.
Plan for Retirement
Divorce can significantly impact your retirement plans as some of your retirement accounts may be subject to division, such as 401(k) accounts, pensions, and IRAs. When dividing retirement accounts, Tennessee courts often use a Qualified Domestic Relations Order (QDRO). Ensure that you understand how these divisions will affect your retirement savings and adjust your retirement plan accordingly.
Update Your Estate Plan
After a divorce, it is essential to update your estate plan to reflect your new situation. This includes changing beneficiaries on life insurance policies, retirement accounts, and updating your Will and/or trust agreements. If you have minor children, consider updating guardianship designations and establishing trusts to manage their inheritance as well.
Planning for the financial implications of divorce in Tennessee requires careful consideration and proactive steps. Most importantly, be sure to work with an experienced Tennessee divorce attorney throughout the process to ensure that understand and control the financial ramifications of your divorce.
Contact a Murfreesboro Divorce Attorney
If you have additional questions about divorce in Tennessee, consult with an experienced Murfreesboro divorce attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.
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