People in Washington whose marriages are ending may wonder what their financial future will hold. After all, after the divorce is complete they will be living on a single income, and they may have been dealt a certain amount of the marital debt. Moreover, they will be responsible for their life expenses -- shelter, food, clothing, utilities and more -- all on their own. The whole situation may seem rather daunting. However, couples in Washington should note that there are financial benefits one could experience after divorce.
First, when a person is single, they will no longer be arguing with their ex over money -- a common source of fights among married couples. After divorce, a person can decide on a budget and expenditures on their own.
Also, when a person divorces, in certain situations they may be able to take funds out of a retirement account early without being penalized. To do so, they may need to execute a qualified domestic relations order. However, if the funds are not transferred to an IRA, a person may still be responsible for paying income taxes on those funds.
If a couple has children, they may hope that their children will one day go to college. Unfortunately, paying for college these days isn't cheap. However, when parents are divorced, the Free Application for Federal Student Aid (FAFSA) - a major source of student financial aid - only counts finances stemming from the custodial parent, instead of that of both parents. This means it may be easier for the child to qualify for financial aid. Keep in mind, that if a parent receives child support and/or spousal support, this will be counted on the FAFSA.
Another financial benefit of divorce has to do with Social Security. If a couple is divorced, once they reach retirement age, they can seek Social Security spousal benefits if their marriage had lasted a decade or more before they divorced. In fact, obtaining such benefits will not affect how much one's ex will get in benefits, and one's ex may not even be aware that their ex is collecting Social Security spousal benefits.
As this shows, while the divorce process may come with a certain amount of stress and uncertainty when it comes to finances, in the end there are financial benefits to divorcing. With careful planning and the right knowledge, people can move forward from divorce on fresh financial footing.
Source: money.usnews.com, "7 Little-Known Financial Benefits of Divorce," Maryalene LaPonsie, Sept. 29, 2017