People seeking a divorce in Georgia might need to mingle retirement planning with their financial decisions about a divorce settlement. A spouse who earned substantially less than a partner should investigate how Social Security benefits will be calculated upon reaching retirement age. People in marriages that last for at least 10 years could gain additional benefits by making a claim upon an ex-spouse's earnings.
Without the proper planning, Georgia residents who are going through divorce may never fully recover financially. However, there are some things they can do to lessen the impact the separation process will have on their financial future.
Georgia residents who are looking to save money on a divorce may be tempted to split retirement assets on their own. However, splitting such an asset without the proper authorization could result in taxes and penalties. In one case, an individual withdrew $250,000 from a 401(k) without getting a qualified domestic relations order (QDRO). That resulted in $85,000 in income taxes in addition to a $25,000 early withdrawal fee.
When a Georgia couple gets married, they may be able to protect their individual finances without a prenuptial agreement. This is not just in case of divorce. The couple gets the opportunity to discuss their debts and assets openly, and their finances can be arranged in a way to protect each from the other's debts.
Georgia couples who are getting a divorce may have various approaches to splitting property, but it is important for each person to understand the value of assets and avoid common mistakes. Alimony and child support recipients may also want to guard against the potential loss of income by taking out a life insurance policy on the payer.
Divorcing couples in Georgia often focus on their immediate needs during property division negotiations, but the decisions they make can cast very long shadows. These discussions frequently become mired in acrimony over assets with high sentimental values, and people sometimes make decisions that jeopardize their long-term financial security in pursuit of short-term goals.
Confusion over the division of retirement assets during divorce can lead to costly mistakes for one or both parties. Couples in Georgia seeking a divorce may not realize that tax law treats 401(k) plans differently from traditional IRAs and IRA variants. Penalties can result in an enlarged tax bill and a number of negative consequences if it cannot be paid on time. Fortunately, there is a right way to go about retirement asset division that completely avoids tax penalties.
When a Georgia couple gets divorced, it is possible that one party will pay alimony to the other. One benefit to paying alimony is that it may be treated as a tax-deductible payment. This is only true, however, if a series of requirements are met such as the payment being made in cash or a cash equivalent.
A divorce can have significant emotional and financial impacts on Georgia couples. The average cost of legal fees, mediation fees and court costs related to a divorce is $20,000. However, there are other long-term costs that a person may not think about after a marriage ends. For instance, parents may be required to pay child support until a child turns 18.
Although Georgia divorces are already complex to begin with, they can become even more complicated if one spouse has a business. If the business was started after the parties were married or it grew significantly during the marriage, determining what value the business has is a crucial step in the property division phase.