How divorce law affects finances

On Behalf of | Nov 11, 2020 | Divorce

According to a study conducted by the Harris Poll, more than 33% of married couples in the United States claim that financial issues are the leading cause of stress in their marriage. Even though divorce is often associated with financial hardships, residents of Colorado may be surprised to know that divorce can also carry with it some financial benefits. How can divorce possibly be good for a person’s budget?

Access retirement funds early

A divorce is one of the very few times when individuals can withdraw funds from a retirement account without being penalized. In most cases, anyone younger than 59.5 years old who takes money from a retirement account has to pay a 10% penalty. At any age, a divorce gives a person the opportunity to immediately access the funds that they’ve built up with no penalty.

More financial aid for children

Divorced parents may notice an increase in the amount of financial aid that their children can receive upon going to college. When a student fills out the Free Application for Federal Student Aid, or FAFSA, they are only asked to list the income of the custodial parent. Since there will likely be just half of the previous income listed, the child may get a larger amount of aid.

Increased control over assets

Since money issues are one of the leading stressors in a marriage, it stands to reason that a dissolution of marriage can lead to fewer fights. Instead of two parties trying to battle over the funds that they both want to use for different interests, each of them will be able to use their money for what they want.

Anyone facing a divorce may want to contact an attorney to help them ensure that they are in a position to financially prosper once their marriage officially ends. A family law attorney may help negotiate debt disbursements and other factors to help their client get a fresh financial start.