Divorce can be an emotionally and financially draining process. When it comes to your finances, it's crucial to understand how Nevada's laws on marital property division, alimony, child support, and prenuptial agreements can impact you.
Financial Issues in Divorce
Here are the various financial aspects of divorce:
- Division of marital assets and debts. Nevada is a community property state, which means all income earned and property acquired by either spouse during the marriage is considered communal property and should be divided equally upon divorce1. This includes debts incurred during the marriage. However, any assets or debts that were owned by one spouse before the marriage, gifts, or inheritances are usually considered separate property.
- Alimony and child support. The court may order one party to pay the other alimony or spousal support. Factors considered include each party's income, the standard of living during the marriage, the duration of the marriage, and the recipient's needs. Child support in Nevada is calculated based on the gross monthly income of the noncustodial parent and the number of children.
- Prenuptial (or postnuptial) agreements. Prenuptial agreements are contracts that determine how assets and liabilities will be divided in case of a divorce. In Nevada, as long as the agreement was entered into voluntarily and is not unconscionable, it will typically be upheld.
Other Ways Divorce Can Impact Your Finances
Getting divorced can also affect you financially in the following ways:
- Impact on retirement plans. Divorce can significantly affect your retirement plans. In many cases, retirement accounts are considered marital property and must be divided equally between both parties. This could potentially diminish the value of your retirement savings.
- Impact on financial future. In the longer term, the effects of divorce might require lifestyle adjustments due to a single income source or increased expenses like childcare. It can also delay financial goals as resources that were previously jointly accumulated now must be built up individually.
- Impact on business assets. Under community property laws, any business established or grown during the marriage is typically considered marital property and thus subject to equal division in a divorce. This means that if one spouse started a business during the marriage, the other spouse is generally entitled to half of its value. The business's value includes not just its current earnings but also its future earning potential, which can be substantial. This could potentially force the sale of the business or require the spouse who runs the business to buy out the other spouse's share. Even if the business was started before the marriage, any increase in value during the marriage might be considered community property.
Tips to Safeguard Your Finances in Divorce
Here are a few ways you can protect yourself financially:
- Document everything. Keep track of all your assets, debts, income, and expenses. This will be crucial for negotiations and court proceedings.
- Consult a financial expert. A financial advisor can help you understand the long-term implications of your financial decisions during the divorce. You may also benefit from the counsel of other financial professionals. For instance, a forensic accountant can be a valuable asset if there are concerns about hidden assets or financial discrepancies. They use their skills in accounting and auditing to delve deep into complex financial situations, potentially revealing any attempts by a spouse to underreport income or exaggerate debts. Their findings can significantly influence the division of assets and ensure a fair outcome. Also, a Certified Divorce Financial Analyst (CDFA) can provide crucial insights into the financial implications of different settlement options. They are well-versed in understanding the short-term and long-term impacts of asset division, potential tax consequences, and the division of retirement plans. This knowledge can help you make data-driven decisions that protect your financial future.
- Create a budget. Plan for your future by creating a budget that reflects your new financial reality.
- Consult with an experienced attorney. Dealing with a divorce involves both emotional and financial complexities. It's essential to have the right professionals on your side to protect your interests. A divorce lawyer is typically the first professional you'll engage with. They have a deep understanding of family law and can guide you through every stage of the divorce process, from initial filing to negotiating settlements involving property division, child custody, alimony, and more. Their legal knowledge ensures your rights are upheld throughout the proceedings.
Experienced Legal Counsel
At Leavitt Law Firm, our attorneys have decades of collective experience. Should you be considering divorce, our team is here and equipped to help you understand your legal rights and options and protect your financial interests.
Learn more about how our attorneys can be of assistance with your divorce case. Call (702) 996-6052.