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Knoxville Family Law Blog

Women often face unique money issues after divorce

Women in Tennessee who are going through the divorce process may be unpleasantly surprised by some of the financial revelations that take place. In one recent survey, 46 percent of divorced women reported that their separations resulted in financial surprises.

In an effort to gain a better understanding of how divorce can impact finances, the survey queried 1,785 women about their roles in handling financial issues while they were married. All of the participants were either considering divorce, in the process of separating or already divorced. Some of the women responded that financial matters were managed solely by their husbands, including the earning of income and the management of the couple's investments and bills.

3 ways to help your children through divorce

Divorce is a stressful and emotionally trying time for any family, but the impact on children is especially great. Children may take on emotions of guilt or fear as they face the reality of you and your spouse's divorce, and the psychological impact can affect them in significant ways.

As a parent, you want to ensure that your children come through the divorce in an emotionally healthy way. Here are three ways you can help your kids as you move through separation and divorce.

Trusts and rising interest rates

By using trusts as part of an estate plan, a Tennessee resident can ensure that certain assets are managed and distributed according to their wishes. Those who have been uncertain about using trusts may be interested to know that due to the recent rise in interest rates, certain types of trusts, such as GRATs and CLATs, can be very beneficial to grantors.

A grantor retained annuity trust, or GRAT, fuses together a trust that is to be used for a certain length of time and an annuity from which the grantor receives a set annual amount. The annuity payout that the grantor receives is their retained interest while the remaining value of the annuity gets passed down to the named beneficiaries.

Dealing with restrictions while a divorce is pending

When Tennessee couples decide to divorce, they may prepare an array of financial, social and practical changes and consequences. Indeed, there will be many changes that take place after the divorce is finalized and asset division is completed. However, there are also a number of restrictions that both spouses will have to deal with while the divorce is pending.

After the divorce papers have been filed but before the dissolution of the marriage is final, there is a general presumption that the status quo must be preserved in advance of assets being divided. For example, one spouse might have to keep their future ex on their health insurance plan until the divorce is final. Also, some parents may have a hard time traveling with their children, especially if the travel is overseas or even out of state. In many states, restrictions are immediately imposed once one party files for divorce. Some of the restrictions are more obvious, like prohibitions on selling property or withdrawing large amounts of money from the bank. These restrictions can even apply to sole property like premarital inheritances, so it is important to be careful.

Child support actions spurred by public assistance applications

Some single parents in Tennessee may need to seek out public assistance, especially if they are struggling to make ends meet on a monthly basis. After a separation or divorce, the lifestyle of the lower-earning partner can be dramatically impacted. This is especially true if the parents were not married yet one partner was financially dependent on the other. Public assistance programs exist in order to provide a necessary lifeline. However, one of the first inquiries made by a social services offices will be about the child support arrangements.

In some cases, a child support order may be in place, especially following a divorce. However, the non-custodial parent may not be fulfilling their obligations under the order. In other cases, there may not be a child support order in place at all. In either of these scenarios, the government can be expected to take action to pursue child support. If there is no existing child support order, the custodial parent will be encouraged to file for support, and the government may also file to seek reimbursement for public assistance costs.

Planning for children's college expenses after a divorce

While approximately 40 percent of marriages in Tennessee and around the country will end in divorce, 66 percent of married people do not have financial plans in place in case they get divorced or their spouses die. This can have a major impact on people's finances. When they have children who plan to attend college, it can make it even more difficult.

People should understand that if they get divorced, their expenses will double. Going from one house to two households means that there will not be as much money to pay for everything. At the same time, college tuition has become increasingly expensive. The College Board reports that tuition has been rising at a rate of 3 percent per year. The average cost for room and board, tuition and fees at a private four-year college is now $46,950 per year. For a public four-year institution, the average total yearly cost is now $20,770.

Child support spending is interpreted broadly

Now that the family law court has set your child support amount, you may think you can breathe a sigh of relief. However, to your dismay, you feel anxiety about your child support check. What if your ex tells you what you can and cannot spend the money on? Can the courts regulate your spending? Will you get in trouble if you decide to spend child support on a nonessential item? These concerns are not uncommon for Tennessee parents who receive child support.

Fortunately, you are generally free to spend child support as you deem fit, explains FindLaw. This money, as you know, is intended to go toward your children's physical and emotional well-being. Thus, there are very wide range of expenses deemed acceptable for child support, including the following:

  • Basic living expenses and household necessities, such as rent, utility payments, soap and toilet paper
  • Food and clothing
  • School supplies, tutoring, sports, music lessons and tuition
  • Doctor visits, over-the-counter medicine, prescriptions and orthodontic braces
  • An emergency savings fund or future college tuition

Financial surprises may happen in some divorces

Some people in Tennessee may be surprised to learn how little they know about household finances and investing when they get a divorce, and according to a survey by UBS Global Wealth Management, this is more likely to be women than men. The survey gathered information from 1,500 couples and more than 600 women who were widowed or divorced. All had at least $250,000 to invest.

The study found that more than 60 percent of millennial women and 54 percent of baby boomer women said they left major investment and financial decisions up to their husbands. In all, a majority of women across all age groups left these decisions in their husband's control. However, while married women tended to be content with this decision, widowed and divorced women had a different take. Almost 60 percent regretted not participating in long-term financial decisions while 94 percent said that they should have had complete financial transparency. Among women who remarry, 80 percent are active in financial decision-making.

Estate planning can help deter family conflict

When a loved one passes away, the situation can soon become complex for families in Tennessee. Issues with a person's estate and disputes over their assets within the family can breed distrust or exacerbate existing concerns over dishonesty, greed or theft. This is especially problematic when a person dies without a will or did not speak with the family about their plans for the estate. While there is no certain way to avoid future conflict, developing an estate plan can help create clear guidance for how a person's assets should be distributed after death.

The distribution of a person's assets after they have passed away is handled by a probate court. Operating under state law, this court certifies the will if one is present and appoints an executor or personal representative. This person is often named in the will as part of the estate planning process. Every beneficiary named in the will has a right to obtain a copy from the court and a right to challenge it, if necessary. The personal representative is responsible for accumulating and valuing the estate as well as paying off any outstanding debts and taxes. After this is handled, the remainder of the estate will be distributed.

Common estate planning errors to avoid

Many people in Tennessee still have no estate plan in place. There is no shortage of reasons why. Attorneys practicing in this area of law have heard them all. They run the gamut from, "I don't own enough to make a plan," to "I don't want to spend the money."

Regardless of your reason, odds are better than even that it is faulty. The one that might stand the test best is that estate planning is complicated. That can be true, but a skilled legal counsel committed to understanding your unique needs is in the best position to know how to apply the available tools to craft a reasonable plan.

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