Going through a divorce may be one of the most difficult, stressful things you do in your life. A divorce can be emotionally draining as you come to terms with how to create your ‘new life.’ And this emotional turmoil can be made even worse if you add financial difficulties to an already stressful situation.
With proper planning and an understanding of why it's important to have liquid financial assets during and after your divorce, a skilled and experienced central-Florida divorce attorney can help ease your emotional and financial burden, and successfully guide you through the divorce process.
The House Is Not a Liquid Asset
The need for liquid assets after divorce is an often-overlooked but incredibly important part of the financial planning that must be done in a divorce.
Liquidity means your ability to quickly convert assets into cash. A bank account is highly liquid – you simply withdraw funds from the account when you need them. By contrast, the house is less liquid because it may be difficult and time-consuming to sell, making accessing the cash value of the asset more difficult.
Why Is Liquidity So Important?
Having access to liquid assets after divorce — and during — is critically important. All-too-often, people going through a divorce forget to plan for the changes in day-to-day expenses they will experience. If you're considering a divorce, it’s important that you set aside money for the incidentals, like gym-memberships, going out to dinner, therapy co-payments, groceries, and even massages.
The liquidity of the assets you receive in the divorce becomes important because you will need to be able to quickly access to the cash value of the assets you receive in the divorce.
Too often, people focus on the big assets – like the house – and forget that they’ll need to spend money on the little things: everything from day-to-day incidentals like groceries and going to the drug-store, to less-routine items like buying paint to refinish the living room and bedrooms.
In many divorces, one spouse receives primarily non-liquid assets, like the residential home, while the other spouse receives more of the liquid assets, like retirement plans and brokerage accounts. The problem with this type of property division is that the spouse who keeps the home sill needs to pay bills. And how do you pay the bills when your major asset – the house – is not liquid?
This is one reason you should carefully consider whether it really makes sense to try to keep the house in your divorce, or whether you should simply sell it as an asset and divide the proceeds from the sale, then move to a smaller, more affordable home.
Liquid Assets After Divorce: It Really Comes Down to Cash Flow
What it really comes down to is a question of cash flow. Will you have enough money coming in – through alimony, child support, your income, and other sources – to handle your new day-to-day living expenses?
To answer this question, it’s important that you create a budget that reflects your new lifestyle. There are thousands of books, articles, manuals, and other publications that can help you analyze the financial implications of a divorce. But none of these will be tailored to fit your unique situation. That's why it's important that you contact a skilled and experience central-Florida divorce lawyer who can assess your needs and provide advice that is customized to address your unique situation.
Contact The Law Office of Jody L. Fisher for Answers to Your Divorce Questions
If you are considering a divorce but are concerned about whether you’ll be able to afford it, contact The Law Office of Jody L. Fisher today for a consultation.
Based in Leesburg, Florida, the team at The Law Office of Jody L. Fisher proudly represents people throughout central-Florida, and frequently provides legal assistance to people who live in "The Villages."
For answers to your divorce questions, call (352) 503-4111, email, or complete our online form.