For women, especially, later-in-life divorce is a process that comes with financial consequences that must be carefully managed.
Homeownership, tax considerations and investment decisions are areas of concern that mediation can address without the need for court involvement.
Mediation as an option
If you and your spouse have decided to divorce, you may assume that a trip to court is the next logical step. However, litigation puts your divorce in the public spotlight and enables a judge to make decisions about your future. Another option is mediation, a process that occurs outside of court. Even in a complex, high-asset divorce, mediation maintains your privacy and puts you in control of matters that affect your future, such as financial security. It is also less expensive, stressful and time-consuming than litigation.
The financial impact
Women should learn all they can about their current financial circumstances in order to prepare for the next chapter in their lives. It is important to consider how you will receive assets since the tax consequences may impact your financial future. For example, you may think that you want to keep the marital home but remember that this is an illiquid asset that comes with property taxes, repair bills and, in most instances, a mortgage. After the divorce, your income picture will change, and keeping the family home would reduce your cash flow.
The transfer of wealth
You may want to transfer your life insurance policy either to your children or your former spouse, but this could trigger an unwanted federal gift tax. However, you can avoid the gift tax by making such a transfer prior to or during the divorce when it is simply a transfer among spouses. If there are brokerage accounts for you and your spouse to split, remember that capital gains apply to appreciated assets and will qualify for an equal split. Divorce mediation can help you understand and deal effectively with issues like these. For a woman facing later-in-life divorce, the proper management of investments is just one more example of financial matters to consider when planning for a secure future.