- Date : 13/07/2018
- Read: 4 mins
Divorces are agonizing. However, following these steps will make the process little less stressful.
Divorce can be a stressful time for both parties involved. The effects are not merely mental or physical; they can also be financially challenging. Your income and lifestyle may get impacted and you could even end up racking up additional debt.
Here are some pointers to safeguard your interests and make the divorce process a little less agonising:
Prepare a financial checklist
If a separation seems inevitable, first of all, you need to prepare a budget based on the household’s monthly income and expenditure.
Evaluate all of your spouse’s sources of income, both active and passive (through investments/ receivable loans, etc.) and copies of Income Tax returns from the previous 8-10 years or the duration of the marriage, whichever is shorter. This will help indicate the assets as they were acquired and also make it easier to show the tax authorities how you and your partner came into possession of these assets (once the divorce is finalised).
Make a list of all marital assets such as house property, vehicles of all types, jewellery, debt and equity investments, insurance policies, retirement plans, art and antiques, etc. Similarly, create a comprehensive list of all individual and combined debt, such as loans for property, vehicles, personal loans, credit cards, etc.
Understand the monetary obligations
One of the key financial issues while separating involves compensation for child support and/or alimony.
If you are a homemaker, financially dependent, or do not earn enough to support yourself, you will be entitled to alimony. It is an obligatory legal process through which the husband has to fund your ‘sustenance’ by paying a fixed sum periodically or making a one-time payment.
The sustenance rights depend on the family’s financial status and standard of living, coupled with the husband’s assets and liabilities.
Things get complicated if you have children. As a mother, your primary instinct is to protect their interests. Spouses can agree to a monthly/staggered amount or a lump sum payment at different stages of the child’s (or children’s) educational lifespan, which factors in the inflationary cost of living, lifestyle, healthcare, and other expenses.
Keep a window for negotiation open where child support can be reviewed and fine-tuned often. Factor in how these payments would fit into your monthly budget.
Plan of action
Take stock of all your liquid savings and if possible have them transferred to individual accounts.
Make a comprehensive updated record of the family’s financial assets. If the records are not updated, you can take the help of a financial consultant to get the best estimate. Make multiple physical and digital copies of the same, which would help if and when you take the legal route.
If there was no prenuptial agreement, sit across the table with your spouse and discuss how to go about dividing the assets and liabilities. Ideally, it would be best to amicably settle everything.
It is best to keep egos out of the door, as litigations are expensive and time-consuming. You both don’t want to end up spending more than what you would receive on a settlement.
Put things on paper and ensure you have accounted for everything, right from large assets such as real estate to minor possessions such as white goods.
The separation agreement will serve as the framework for the divorce settlement, including everything mentioned previously. Ensure that it is drafted and verbalised in a manner that it leaves no room for ambiguity and safeguards your interest.
With a ‘mutual’ divorce, the two of you should be able to move on with your respective lives just six months after filing for divorce. In the meantime, you can continue living in the marital house, as long as there’s no risk of physical or emotional harm.
You would have also received various gifts during your wedding and the duration of your marriage. For hard assets such as house, car, land, etc. it's good to have a clear proof of ownership. Without proper documents, it will purely depend on the terms of settlement. However, all gifts, jewellery and appliances, given by your parents, spouse or in-laws become your property. Keeping a record of all assets makes it easier to assert rights during a divorce. It is also advised to preserve the wedding pictures to prove that jewellery was received as a gift at the wedding.
The way forward
Ensure that your ex-spouse is removed as a joint holder or nominee of any assets, investments, insurance policies, savings schemes, retirement plans, etc. Get another loved one, say your child, nominated instead.
Your life will be open to new opportunities. It’s time to rebuild yourself and your financial future. Make a list of things you want to achieve and rewrite your financial goals. It’s going to be a fresh, new chapter.