Property & Debt Division in Tennessee
While married, many couples work together to develop a retirement plan, saving money away in various retirement accounts, such as 401ks and IRAs. Beyond this, couples may have various savings accounts, investment accounts, and shared property.
When it comes to marital debt, many couples have a shared mortgage on their homes, shared credit cards, and various personal loans they may have taken out. The individual parties may also have their own student loan or medical debt. This all must be dealt with when the couple divorces.
Tennessee is an equitable property state. This means that when a couple divorces, they must divide their property and debts in an unbiased and fair way. Sometimes this means a 50/50 split, and sometimes it doesn’t. However, regardless of how your property division settlement shakes out, dividing your assets can have a long-term impact on your financial health. Keep reading to learn more.
How Property Division Can Affect You in the Long-Term
As a married couple, your expenses were combined. You likely lived in the same household, and whether you each worked outside the home or not, your living expenses were shared. It is significantly less expensive to share a single household than it is to live separately. When you divorce, you will become solely responsible for your own household expenses. This can be an incredibly difficult adjustment; depending on your income, you may even struggle to live at the same comfort level as before.
Additionally, you will no longer have the help of your spouse when repaying debts and may find that you struggle to make payments. For example, even though student loan debt is typically treated as individual or separate, it is common for one spouse to help the other pay down their student debt while married. Losing this assistance can put you in a financially precarious position.
Alternatively, you may find that you must sacrifice other financial goals to focus on debt repayment. For example, you may have to slow down or stop retirement contributions while you figure out how to manage your new financial situation. Losing out on those contributions can dramatically change what your retirement looks like and even push back the age at which you can afford to retire.
Other financial concerns to know about when divorcing:
- Your tax situation is going to change
- You may not be able to use the child tax credit
- Your retirement account may be split with your ex
- Your health insurance provider and cost may change
- Your day-to-day lifestyle may change to accommodate your new financial situation
Potential Financial Benefits of Divorce
While divorce often has detrimental effects on both parties’ financial health, there are situations in which a divorce can benefit a couple financially, especially considering the long term. In particular, spouses who are not aligned on their financial goals or for whom finances play a major role in their divorce may find that their financial health improves after their divorce. This is largely because they are now free to manage their finances how they see fit and in a way that is most beneficial to them.
Some potential financial benefits of divorce can include:
- Greater control over your own money
- Autonomy over how to plan for retirement
- More flexibility over day-to-day expenses
- Easier budgeting process
- Reduced conflict over how money is allocated in the household
Even for divorced couples with child support or spousal support orders, a divorce can bring financial benefits, practically and emotionally. Money and how it is spent can cause significant stress and anxiety for couples, and if this is something that you and your former spouse were dealing with, divorcing may bring you both a considerable reprieve from this type of conflict and stress.
If you are considering going through a divorce, no matter what stage of life you are in, it is a good idea to consult with an experienced attorney like ours at Casey, Simmons & Bryant, PLLC. Send us a message online to schedule a consultation.
