You’re finally divorced and starting life as a single person. When the relief passes and the reality sets in, you may be facing expenses that previously your spouse’s salary covered, in whole or in part.
Whether you’re still partially covered, not covered at all or coverage will end at some point, these are a few of the most common expenses you should anticipate after the divorce:
- Health, dental and vision insurance. An employer sponsored health, dental and vision plan is common for a family, and the savings through this type of plan is significant. When a divorce is finalized, the non-employed, ex-spouse cannot stay on the plan and will have to buy an individual policy or choose coverage through COBRA (Consolidated Omnibus Budget Reconciliation Act). Both of these choices can be very expensive.
- Homeowner and car insurance. Discounts are given when multiple policies are purchased together, so before the divorce, discounts most likely applied. Now that policies will be separated, costs can increase. Even if one spouse is ordered to continue to pay for the insurance of another, discounts will cease as coverage cannot be bundled.
- Retirement. A 401(k) in which the employer contributed is a great savings vehicle for employees and couples. Although a spouse may ultimately get one-half of the value of the 401(k) at the time of the divorce, the savings’ vehicle of employer provided contribution stops for the non-employed spouse. The non-employed spouse will now have to set up their own individual account and begin making contributions to save for their retirement.
- Taxes.The most common practice in married couples is that one spouse handles the taxes, while the other simply signs the return. Once the divorce is finalized, each spouse must take responsibility for handling his or her own taxes. An ex-spouse that receives spousal support, or alimony, will have to budget for taxes due on those monies. Depending on the finances, that ex-spouse may have to make estimated tax payments. The change in tax status from married to single or head of household could also greatly affect the taxes owed in any given year.
- Memberships and other "family" plans. Memberships to gyms or cell phone plans will change and possibly be more expensive.
- Life insurance. Life insurance is often provided through an employer and sometimes includes riders for spouses. When the divorce is finalized, the life insurance for the non-employed spouse is terminated.
This list can seem overwhelming, but remember many single people are paying these expenses and surviving. If you’re feeling overwhelmed, there are many online resources available that can teach you how to budget, such as Yahoo! Finance or CNN Money.
Getting Legal Help
The experienced Sacramento Family Law Attorneys at Bartholomew & Wasznicky LLP can help you navigate your divorce and child custody issues with respect and compassion. Contact Bartholomew & Wasznicky LLP today for knowledgeable and respectful representation. Call us at (916) 455-5200 or email us at info@DivorceWithRespect.com.