- Did you know that roughly
four out of 10 marriages end in divorce? - I mean, I get it. - That number has come down
somewhat since the 1980s, but. (record scratches) Wait, what do you mean you get it? - Oh, just the things
don't always work out the way you envision. - Go on. - Well, for example, I was
fairly certain when I was little that my husband would be- - Yes? - Jonathan Taylor Thomas. But I'm glad he's not. This is so much better. - For one reason or another- - I'm pretty sure. - For one reason or another, lots of marriages simply run their course, and finding yourself suddenly single is a major life change that can turn your finances upside down. - When it comes to untangling your money and starting over, what
happens to your debt? How are your assets divided? How do your taxes change, and what does it all mean for your income? - Jonathan Taylor Thomas. (uplifting music) - Divorce can be a wealth strangler. If you hire a divorce attorney
to handle all the nuts and bolts, you could easily drop tens of thousands of dollars on legal fees. Attorneys do a lot, like negotiating with your
spouse's lawyer on your behalf, drawing up paperwork and correctly filing so all of your divorce is
legal in the eyes of the law. - You'll probably keep more money in your pocket going through mediation. This involves hiring a neutral third party who is specially trained in divorce law and dispute resolution to
help you work out the details of the split. Mediation is typically faster, cheaper, and less stressful, though it may entail
hiring some other experts like an appraiser to value your property, a social worker to weigh in
on child custody questions, and perhaps even a lawyer since mediators cannot give legal advice. Mediation can be a solid option if you have a straightforward
divorce where both parties are in agreement on most things. But if you're butting
heads and things drag on, the final bill can get hefty. - Divorce could throw
a lower earning spouse into financially choppy waters, especially if they've been a stay at home parent. All of a sudden they're on
their own to manage their money and keep up their household as a single person. Think of alimony, aka spousal support, as a temporary lifeline, one spouse provides financial support for a predetermined amount of time so that other can catch their breath. Every state has its own rules for determining alimony,
but both parties' income and expenses usually come into play. The idea is to enable
the lower earning spouse to maintain a similar standard
of living post divorce. - Raising kids comes with
a lot of expenses too. There's food, clothing,
housing, healthcare, activities, and so much more. Child support swoops in to make sure that each parent continues
paying their fair share after the divorce. Each state has its own guidelines for calculating it, but
certain factors tend to carry the most weight, namely your income, your ex's income, the number of children you have, their unique needs and
your custody arrangement. It's usually structured as a
monthly payment that fades out as each child comes of age. - Chances are going from
a two income household to the single life is going
to affect your lifestyle. If you own a home with your soon to be ex, you'll have to figure out
what to do with your digs. A property appraisal
can clarify the numbers. One of you could buy the
other out either with cash or by giving up other assets, like investments or retirement accounts. The one keeping the property
would then refinance the mortgage into their name, or you might agree to sell the property and split the profit 50/50
before going your separate ways. - How you split up your debt depends a lot on what state you live in. In some, a judge may decide
to use their own discretion to break up your debt based
on factors like income, employment and who accumulated it. In other states, marital debt is simply split
down the middle, and that's that. - Let's say you've each
got some student debt and credit cards, but one
spouse has way more debt than the other. Unless you can agree
on how to split it up, you'll have to go to the court and let the judge decide
based on state laws. - The IRS doesn't care if
you're married or divorced, they just wanna get paid. During tax time, you'll likely go from filing
jointly to doing it solo, sounds easy enough, but
things can get sticky the year you get divorced. Married couples benefit from certain tax breaks so your accountant might
actually suggest filing jointly if you're separated but not yet divorced. - When you do start filing
your taxes separately and you've got kiddos, you
guys will have to figure out who's claiming them as dependents. It's important because
it could open the door for some nice tax credits. - One other thing, alimony
and child support don't count as taxable income. Good news for the receiving spouse, but the spouse making these payments can't write it off as
a tax deduction either. Sorry, but that's the rule as of 2019. - Yikes, this stuff is
kind of a downer, huh? - Yeah, but it can also
be a teachable moment for couples who want to turn things around and grow together. - Couple's therapy can be a game changer. Think of it as routine maintenance to help keep your
relationship going strong. We've been going for 13 years, and it's made all the difference. - Or you might find that
you'd be truly happier starting a new chapter on your own. Maybe you'll meet somebody new and better like Jonathan Taylor Thomas - Save it for therapy. - And that's our "Two Cents". - Thanks to our patrons for keeping "Two Cents"
financially healthy. Click the link in the description to
become a "Two Cents" patron. - What is Jonathan Taylor
Thomas doing in 2022? Jonathan Taylor Thomas is living his life, walking his dogs and being happy.
Though not strictly a Bogleheads topic this short video is informative. Particularly when it comes to assets. I am saving for retirement for my spouse and I, the thought of splitting it would be a challenge.
Also if you're looking for fantastic finance content this channel is a good follow.
Ive been saving towards retirement since I got my first job at 16. It wasn't a lot, but at that age you feel every penny going out.
This is one of the reasons I choose not to get married. I've made tiny and large sacrifices over the years to set myself up in the future. the possibility of then losing half of all that money i personally sacrificed for, would absolutely drive me nuts.