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Introduction to Divorce and Finances in GA
When facing a divorce, it’s normal to be scared about the financial impact it will have on you and your family. Everyone should have a financial plan and a budget that works for them and their family, so they don’t have to worry about one more thing on top of their family dynamic changing.
Divorce is already complicated and challenging as it is, and the stress and emotion involved in the divorce process can affect how spouses approach financial planning and division of assets. Things like property division, alimony, and child support are all complex topics that are best handled by an experienced family law attorney.
Money is a tricky topic for most people. No one likes budgeting, but everyone likes the benefits of having a solid budget. When it comes to divorce, having a plan is the best way to move forward and protect yourself and your family.
Financial Considerations in Divorce
There are several things to consider financially when it comes to divorce:
Division of Marital Property and Debts
Georgia follows an equitable distribution model for property division and debt. This means that unlike community property states, where assets are divided equally, Georgia courts aim to distribute property fairly and equitably. Georgia divorce property division is based on fairness and the unique circumstances of your specific case rather than a 50/50 split.
In Georgia, marital property generally encompasses assets acquired by either spouse during the marriage. This includes income, real estate, retirement funds, investments, and more importantly, businesses that have been established or expanded during the marriage.
However, it is essential to note that not all property acquired during marriage is automatically classified as marital property. Assets obtained through inheritance or gifts to one spouse, as well as those defined in a prenuptial or postnuptial agreement as separate property, are excluded from the marital estate.
Spousal Support (Alimony) in Georgia
Alimony, or spousal support, are terms that are used interchangeably to refer to financial assistance provided by one spouse to the other during or post-divorce.
Alimony is calculated through an examination of several factors, including:
✅ Duration of the Marriage: Longer marriages may warrant higher spousal support.
✅ Financial Resources of Each Spouse: This encompasses income, assets, and earning potential.
✅ Standard of Living During Marriage: The court will aim to uphold what the standard of living was during the marriage for both parties post-divorce.
✅ Contributions to the Marriage: This includes non-financial contributions, such as homemaking or supporting a spouse’s career.
Types of Alimony in Georgia
Under Georgia law, alimony can take various forms:
➡️ Temporary Spousal Support: Temporary spousal support is provided during divorce proceedings to address immediate financial needs.
➡️ Rehabilitative or Periodic Spousal Support: Aimed at assisting the receiving spouse in becoming self-sufficient through education, training, or employment.
➡️ Permanent Spousal Support: Permanent spousal support is granted when one spouse is unable to achieve financial independence, often due to age, health, or other factors.
➡️ Lump Sum Spousal Support: Lump Sum Spousal Support is when one spouse is given a lump sum of money to offset the need for temporary or periodic spousal support.
The type of spousal support awarded depends on the unique circumstances of each case, with the court striving to achieve fairness and equity.
Child Support and Financial Obligations
Child support is a critical aspect of divorce when kids are involved. Financial considerations in divorce often revolve around child support and custody arrangements. Custody decisions have implications on finances that can impact one or both parents. However, ensuring the financial well-being of the children should always be a top priority. These payments are meant to support the children’s needs and ensure they maintain a similar standard of living after the divorce.
Some of the factors considered for child support include:
➡️ Number of children
➡️ Each parent’s income
➡️ Each parent’s custody time arrangement
Protecting Your Financial Interests
There are a few ways to protect your finances during and after divorce. In Georgia, couples should consider prenuptial and postnuptial agreements.
Prenups and postnups can get a bad rep, but in reality, they are a valuable tool to create a strong foundation for your marriage.
What is a Prenup in Georgia?
A prenuptial agreement, commonly known as a “prenup,” is a contractual agreement two people make before marriage. This legal document outlines the financial rights and responsibilities of each spouse in the event of a divorce or separation. During divorce, marital property is divided among both parties using Georgia’s equitable distribution model. But with a prenup, potential marital assets can be safeguarded as separate property to keep both parties protected. This way, the couple gets to decide how to split assets instead of leaving it up to a judge.
In Georgia, the case approving a prenuptial agreement is Scherer v. Scherer, a 1982 decision in which the Supreme Court first set forth a three-pronged test for determining the enforceability of such agreements:
Whether the agreement was obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts;
- Whether the agreement is unconscionable; and
- Whether the facts and circumstances have changed since the agreement was executed, so as to make its enforcement unfair and unreasonable.
- Simply put, the party who is seeking to enforce the prenuptial agreement must demonstrate the factors mentioned above.
Planning for the Future
It’s important to build a solid financial foundation for life after divorce. Here are some things to consider:
- Having an investment strategy tailored to your specific situation.
- Building an emergency fund of 3-6 months of living expenses.
- Keeping a close eye on your budget and maintaining financial stability.
How are Retirement Accounts Divided During Divorce in Georgia?
Most often, accounts are divided with a Qualified Domestic Relations Order (QDRO). A QDRO is a court order that gives instructions to retirement plan administrators on how to divide retirement assets between divorcing spouses.
For example, let’s say a husband needs to pay his wife $50,000 to equalize their retirement after divorce. The divorce would lay out the terms of how much money needs to be paid and from what account. After that, the judge signs a QDRO, and it orders the financial institution to split the retirement account in a way that there are no taxes or penalties by either party.
In general, QDROs are necessary to divide 401Ks or 403b plans or any government sponsored retirement plan.
How Brown Dutton & Crider Can Help Protect You and Your Family’s Finances During a Divorce in Georgia
When facing a divorce, it’s normal to be scared about the financial impact it will have on you and your family. Everyone should have a financial plan and a budget that works for them and their family, so they don’t have to worry about one more thing on top of their family dynamic changing.
Divorce is already complicated and challenging as it is, and the stress and emotion involved in the divorce process can affect how spouses approach financial planning and division of assets. Things like property division, alimony, and child support are all complex topics that are best handled by an experienced family law attorney.
Money is a tricky topic for most people. No one likes budgeting, but everyone likes the benefits of having a solid budget. When it comes to divorce, having a plan is the best way to move forward and protect yourself and your family.