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  • Financial implications of divorce

    Going through a divorce can be difficult on many levels. While financial concerns may not be top of mind during this difficult time, the reality is that many different issues must be considered. Taking the right steps now can help you feel more confident about your financial future. When considering how the divorce impacts your finances, try to keep a clear head and focus on your long-term financial well-being.

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  • Legal representation

    If you have joint financial interests or children, you may find that hiring a lawyer is essential.

  • How divorce can affect your insurance needs

    Your coverage and insurance requirements may change significantly following a divorce.

  • What you need to know about child support and alimony

    There are tax and other financial implications, depending on whether or not you have custody of children.

Topics and resources

Legal representation

There’s no legal mandate that you hire an attorney when getting a divorce. You may not need one if you are young, have no children, or have few assets.

However, couples with joint financial interests – especially those with children – are generally wise to hire attorneys. It is a necessary expense to help ensure you protect yourself financially and personally.

If you are a homemaker, or earn less income than your spouse, it may make sense to get legal representation. Submit a motion to the court, asking that your spouse be responsible for your attorney fees.

The bottom line

Knowing ahead of time how divorce affects your financial life will let you prepare for it and focus on moving forward with your new life.

How divorce can affect your insurance needs

Your insurance coverage and requirements may change, especially if you have children.

Life insurance

Many life insurance issues revolve around whether you are granted custody of the children. For instance, it’s often up to the custodial parent to make sure the life of the noncustodial parent is insured — this ensures that children continue to have financial support if a parent dies. If you are the custodial parent and are receiving child-support payments and/or alimony, you can purchase a life insurance policy on your ex-spouse. If, for some reason, you cannot obtain new insurance, have his or her existing policies transferred to you as the new, outright policy owner or irrevocable beneficiary. You can include this provision in the divorce agreement.

Health insurance

Some divorces specify that whoever provided health coverage for the family during the marriage must continue to provide it after the divorce. This spouse may have to pay additional premiums to continue this coverage. Some group policies may routinely allow continued coverage for the family even after divorce.

Remember to update your retirement plan beneficiaries

When going through a divorce, it’s a very good idea to update your retirement plan beneficiaries. This ensures that your retirement assets are distributed according to your wishes should you pass away.

The bottom line

Knowing ahead of time how divorce affects your financial life will let you prepare for it and focus on moving forward with your new life.

What you need to know about child support and alimony

Child support and alimony payments are often conditions of a divorce. Whether you are making or receiving the payments, be sure you understand all the implications.

Child support

  • Typically, the noncustodial parent pays child support to the custodial parent
  • Child-rearing expenses that exceed child support payments are generally the responsibility of the custodial parent
  • Child support payments aren’t taxed, nor can they be used as tax deductions
  • The custodial parent gets a significant tax advantage — that parent can claim the child dependency exemption and the child-care credit

Alimony

  • Alimony is taxable income to the spouse who receives it, and tax deductible for the spouse who pays it
  • All payments must be made in cash, or by check or money order
  • The alimony obligation ends with the death of the paying spouse
  • The ex-spouses cannot file a joint tax return
  • A written court order or separation agreement pertaining to the alimony must exist
  • The ex-spouses generally cannot reside in the same household while alimony is being paid

The bottom line

Knowing ahead of time how divorce affects your financial life will let you prepare for it and focus on moving forward with your new life. 

Divorce

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Life insurance contains exclusions, limitations, and terms for keeping it in force.  For costs and complete details contact a financial professional.

This information is provided for informational purposes only. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

Please be advised that this document is not intended as legal or tax advice.  Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.  The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.

AXA Equitable Life Insurance Company (New York, NY) issues life insurance and annuity products. Securities offered through AXA Advisors, LLC, member FINRA, SIPC. AXA Equitable Life Insurance Company and AXA Advisors are affiliated and do not provide tax or legal advice.

GE-89715 (10/2016)