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Divorce in 2016 requires financial planning now

Divorce filings are expected to increase in January in New Jersey and in other parts of the country. This is because many people who are not happy about their marriages have finally gotten through the holiday season and realize they want to begin the New Year fresh. A few tips might help people effectively plan ahead for a divorce proceeding to take place in 2016.

First, it is essential that one gathers all of his or her financial records. Then, it is suggested that a person take an inventory of his or her life insurance policies as well as retirement accounts, such as 401(k)s and IRAs, and think about who he or she wants to be a beneficiary in the place of his or her future ex. In addition, the person might want to get in touch with a financial professional to determine the tax implications of getting a divorce. For instance, two spouses who earn high incomes might actually be better off following a divorce, whereas if one person has a high salary and the other one does not, only the latter one might qualify for any income tax deductions following divorce.

Also, in addition to a divorce decree, a person might need a document called a Qualified Domestic Relations Order. This court order requires for workplace retirement benefits and IRAs to be divided. Paying attention to what happens to retirement funds during a divorce is especially critical for the increasing number of baby boomers getting divorced today as they get closer to the age of retirement.

Although divorce is a decision that is usually emotionally charged, the biggest implications tend to be financial. An applied understanding of the law may help people make educated decisions regarding matters such as asset division during divorce. Both parties have the right to fight for their best interests while still considering the other person's wishes in New Jersey.

Source: marketwatch.com, "Divorcing in 2016? Get your affairs in order first", Quentin Fottrell, Dec. 12, 2015

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