How to survive a divorce with your finance intact

Chitra Iyer

In India, unlike the West, a pre-nuptial agreement (what to do in case the couple must part ways in the future) isn’t laid out. Today, divorce rates are soaring, leading to a lot of emotional and financial upheaval in both the man and woman’s lives. Decisions taken during this time can cause detrimental effects on an individual’s future.

Emotional side effects

Early stages of divorce require both individuals to deal with anger, betrayal, loss, shock, confusion, panic — all in varied combinations.

It almost seems like a roller coaster that’s on a continuous loop.

However, the ride does stop. The post-divorce period is when emotions begin to stabilise and when one must have control over varied aspects such as financial, social and legal. Life after divorce does change but accepting and even embracing the change is what will aid in redesigning your life.

Financial side effects

In the Indian setup, on an average, the man is the bread winner and the main decision-maker when it comes to financial matters. Once a couple files for divorce, they must stay apart for a period of a year till the divorce is granted. This is the time when cash flows and net worth statements must be drawn up.

• Income earned by the husband and wife must be separated.
• Mandatory expenses like that of running the household must be listed.
• Decisions need to be made about whether to buy a new house or live in a rented one.
• Determine how much you would be comfortable saving against your earnings.
• List out all investments; real estate, stocks, mutual funds, life insurance policies, PPF, money in the bank, etc.
• List out all the assets bought together (cars, white goods, jewellery, etc.)
• Also list out all liabilities you have committed to.
• Figure out the legal fees payable for the divorce.

If both partners are working professionals and have children, they need to arrive at their share of the child welfare expenses. If the woman isn’t working, monthly alimony or a one-time payment needs to be decided upon. A lot of times, the woman is unaware of how to best make use of the alimony to restart her life. The main reason behind this is the lack of financial literacy.

The collective goals of the family need to now be relooked at as individual goals and money thus needs to be saved for each goal such as:

• Share of children’s education
• Setting aside money for tax saving under Section 80C
• Health corpus
• Contributing towards buying/renting a house
• Retirement goal
• Saving to buy a car
• Going on an annual holiday
• Setting up trusts to distribute income to children, should the parents wish so.

A good inancial planner is necessary to help you build your personal goals. He/she would help in managing the cash flow and directing investments towards your personal goals, getting adequate risk covers in place, providing for contingencies and health-related expenses, etc. The purpose is to connect with someone who will be able to simplify the entire financial conversation and who will solely think of your well-being as you look to regain financial stability.

Divorce checklist

Here are the steps you must take once the divorce is finalised.

A copy of your certified divorce decree: Make extra copies and store them in a safe location. Changing and updating the surname is also important if you had acquired the title of your spouse post marriage. This is a legal procedure and must cover all documents such as PAN card, Passport, driver’s licence as also banks and insurance companies.

Closure of joint accounts: Mostly people undertake this step in the early stages of the divorce procedure itself. But in case this step has been looked over, one must deactivate all joint accounts.

Draft a financial plan: Financial planning is very important, especially if one is a single parent, with the liability of raising a child. When and for what the money will be needed must be planned to facilitate a smooth transition in future?

Hire a career counsellor: Getting back to professional life, especially after a long break, can be a daunting task. Women must then assess their core strengths and network across their social groups to be gainfully employed. Getting professionally qualified is also advantageous.

Hire a counsellor for yourself, children: In Indian society, marriage is considered to be a sacred institution and its breaking down, sacrilegious. At such a time, having someone to talk to, judgment free can be very beneficial.

The writer is COO at HappynessFactory.in. The views expressed in this article are his own