Usually, people only see divorce as a significant loss. You end up separating your assets and lose a major source of income. That doesn’t mean there is no financial benefit. Remember that you are not just losing an income but also removing a major burden. This can result in more freedom and opportunities to improve your finances.
There is a bright side to every situation, even if it doesn’t look like it now. If you’re not convinced, here are some examples of how divorce can actually be a good thing for your finances.
Control over your own money
The top benefit of divorcing is becoming financially independent. For some people, shared accounts meant their partner was too critical of their actions. After divorce, you can now have complete control over all your accounts and assets. If you previously had investments, then now you have full reign on where to put it in.
Studies show that fighting is the third most common reason why people divorce. In a lot of marriages, couples fight over their expenses. In some situations, one partner spends too much and financially hurts the other. In more abusive relationships, one partner takes full control of the other should and should not spend. The law even acknowledges these situations by requiring partners to have separate divorce lawyers.
If you two are in sync with your finances, then there will always be problems in your marriages. With a divorce, you no longer have to worry about asking someone else what to spend or save on.
Access retirement funds early
Another thing most people don’t know about divorce is that it can allow you to access your retirement fund without penalties. Usually, there is a ten percent penalty fee for withdrawing an amount before reaching the required age. However, divorce can drastically change a person’s financial position, and many lose a major source of income. This is why companies acknowledge divorce as a legitimate reason to take away penalties. Many people take advantage of this and take out as much as they can. But of course, you shouldn’t do that.
To do this, you need to submit certain documents that need to be reviewed by your attorney before submission. Experts also warn against changing beneficiaries before the divorce is finalized. In some states, this is actually illegal, and a financial restraint is in place to prevent you from doing so. Making any major changes might work against you in the negotiation process.
Separation from loan
If you have a partner that has a lot of debt, then you will be glad to know that you won’t be carrying said debt, mostly if it was done before your marriage. Unfortunately, debts made as a couple will be split. However, you can also rest easy that you won’t be shouldering most of it because your partner will also need to pay for it. That means not one person will be carrying the full load of the debt.
Laws regarding separation and divisions on loans vary, so you have to consult with a legal expert on that matter. You can also file to have yourself removed from a debt. It often means forfeiting rights to said property. For those that make significantly less than their ex, there is a good chance that the lender will allow your name to be removed. On the other hand, debts that are in your name cannot be removed. A partner can also be removed from the loan if the other requested a new one.
Increased financial aid
Since financial aid and grants are often based on income and such, you can increase your chances of getting higher aid if you are a divorcee. This is especially useful for those with kids. Divorce generally means that your expected family contribution is lowered. For custodial parents earn less, this means that you and your child can acquire higher grants.
When you are divorced, the Free Application for Federal Student Aid only looks at the custodial parent’s income and assets. However, they also look at alimony and child support. Even with this, your overall income will be generally lower as a divorcee than when you were married.
Divorce is a complicated process, and it can mean a lot of tough times. Fortunately, there are rules in place that can help ease this burden. You can always ask your lawyer for the opportunities that you can look into after divorce.