5 Hidden Divorce Costs

On behalf of Ronald H. Kauffman, P.A. posted in Divorce on Thursday, April 25, 2013.

The costs of a divorce can be high. This is especially true if you have no idea of what to expect, or have no experience with finances.

Most people think you lose your money in divorce through alimony or child support paymets. And of course, dividing up your assets will also take a chunk. But there are other ways that divorce impacts your finances, and many people don’t think about them. Here are five of them:

Legal fees: Even if you have an amicable divorce, legal fees can be high. If you and your spouse go to court to contest an issue, the legal fees can rise quickly.

Childcare costs: Divorced parents typically need to pay for childcare, daycare or aftercare more often than they expected to because the child’s other parent is not around as much.

Taxes: Filing single, after years filing married jointly, can increase your taxes.

Retirement: Because you are single, and don’t have a partner making contributions you share, your contributions to your pension, IRA and 401(k) will usually be comparatively lower, and you may have to work longer.

Insurance: Married people don’t have to spend money on long-term care insurance because they have a partner. After a divorce, single people may need to purchase such a policy.

“Most people don’t realize the depths of what divorce can do when it comes to their finances,” Fraelich said. “It is usually a matter of much more than a loss of salary or income.”

You can read more about it in this article in the LA Times.