Filing for divorce? 5 financial steps you should take

NDTV Profit Desk

10 Dec 2013, 04:42 PM IST

Secure children's future: Irrespective of the terms of the child's custody, his/her future should not be impacted in terms of financial planning due to the divorce. If there are 'child plans' that have been funded jointly, then discontinuing them can result in penalty charges. It makes sense to continue such plans and settle to fund them alternately. Post the divorce one still continues to be a parent and the responsibilities of the children have to be shared. Even in case of a sole earning spouse adjustments have to be made to save for the children by managing expenses.
Division of joint assets and liabilities: Make a list of all your family assets like fixed property, investments, insurance etc. This list is important before seeking the help of a legal counsel. Assets can be divided based on the contribution of each spouse if they fail to come to an agreement. Any joint liabilities have to be separated from individual debt. They can be closed if it is in the best interest of their financial health post the separation or if it is so desired by both spouses. If the joint liability is backed by an asset like a home loan, then the bank has to be appraised of the situation. After arriving at a consensus, update the change in details and beneficiaries on all future investments and insurance plans.
Division of household items: Household items like home appliances, television sets, furniture etc. have little or no re-sale value. Even if the sale earns a decent cash flow, the re-placement value of such goods is still high owing to rising prices and changing technology. Couples can agree to split these items. Sell them only if no accord is reached at.
Plan for future: Alimony and child support can act as an aid, but it may not always be sufficient. In India, most financial problems post-divorce occur with women who have never worked or left it post marriage. Skill-set improvement courses to help them get a job or a regular income stream may be considered in such cases. If both spouses are working then personal finances may not be adversely affected by planning ahead.
Mutual consent: Divorce impacts all aspects of personal finance and cannot be ignored. If divorce is taken with mutual consent, the counsels to both spouses help them arrive at an amicable agreement. A settlement arrived by this course alleviates the burden of mounting legal expenses otherwise found in bitter battle for division of properties.

ArthaYantra provides personal finance advice online.
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