Divorces are often difficult and messy. When two people have lived together for years with joint accounts, it can be very difficult to separate assets in the marital estate. Your family lawyer might tell you that one of the most overlooked issues in divorce is the development of a budget.
Needless to say, the children should always be the highest priority during divorce. However, the needs of the children are not based solely upon intangibles such as love and affection. Financial soundness is an issue of paramount importance when determining how best to serve the needs of the children. That is in part why developing a budget during the divorce should be one of the highest priorities.
Financial awareness, indeed, is of utmost importance in determining the extent of the marital estate and how it should be divided. The value of the marital estate is derived from the formula as follows: What is owned minus what is owed. For instance, if the total assets in the estate add up to $73,000, but the couple owes $20,000 in credit cards and other debts, the value of the estate equals $53,000.
What a Budget Shows
An interim budget during the divorce serves two purposes. First, if the budget shows that the couple’s assets are minimal, then basic survival becomes an issue, which can affect where the children are placed. Second, if the budget shows that the couple enjoys considerable assets, then each party will seek to make sure their standard of living does not change.
Without an accurate idea of the assets in the marital estate, it would not be possible to produce disclosures that are required by law. The budget can be used to work out transfer of alimony, family support and child support.
Keeping a Second Budget
It is, indeed, a good idea to develop a second budget that helps show the financial situation that will exist for both parties following the divorce. This is important especially in instances where the marital estate is minimal and/or significant indebtedness exists. In such cases a determination might be made regarding protection from creditors through bankruptcy.