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Thinking long-term about finances when going through a divorce

When a couple is in the midst of a divorce and are dividing assets and finances, many people are guilty of thinking in the short-term and just wanting the divorce process to be over. The goal may be to split funds quickly and move on after a divorce. However, Pennsylvania couples may benefit by thinking about the long-term financial reality before agreeing to certain property division decisions or support payments.

When a couple has to decide what to do with a marital home, the decisions made may be based more on emotion than smart financial planning. Before deciding to pursue ownership of the home or walk away from a property, long-term equity implications should be considered. It should also be considered if keeping the home is something one partner can handle financially when the dust settles.

Divorcing couples may also need to consider settlement or support payments and how those may affect taxes, also. Alimony is taxable to the recipient. While some couples decide to pay and receive alimony each month, others may agree to a lump sum payment. That decision may affect taxes and save money over the long run.

One couple may have vastly different needs than another couple. Those Pennsylvania residents in the process of a divorce may gain by seeking assistance in assessing the options available and determining whether an alternative that seems beneficial now will be in one party's best interest in the future. Being able to make an informed decision and understanding the future implications can help both sides in negotiating property division and support options that benefit everyone involved.

Source: USA Today, "5 biggest divorce mistakes financially", Wendy Spencer, March 7, 2015

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