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Understanding cash flow needs during divorce

When a Maryland spouse is considering ending his or her marriage, there are a number of financial considerations that must be given the proper level of attention. Chief among these is understanding how one's cash flow needs will change after the divorce is made final. Knowing how much income will be required to make ends meet is the first step in structuring a favorable property division settlement.

When thinking about dividing marital assets, each party must make an assessment of how their cash flow sits in relation to their projected expenses. For example, a spouse who has set aside his or her own career to care for children or support the goals of the other spouse may re-enter the job market with a decreased earning potential. Such an individual may need a few years back in the saddle before he or she can earn enough money to cover all costs. In this case, it would make more sense to pursue assets that can be easily liquidated, such as bonds, cash or mutual funds.

On the other hand, a spouse who has a secure means of income has the luxury of making more strategic property division choices. He or she could pursue retirement investments, real estate or other assets that may be more difficult to liquidate, but which might also have higher value. This approach can ultimately lead to better returns in the coming years.

When considering various property division strategies during divorce, Maryland spouses should take the time to assess their current and projected cash flow needs. Building a negotiation strategy around those needs is a solid approach. At the end of the day, financial security is the main goal of every divorcing spouse, and cash flow plays an important role in that process.

Source: Market Watch, "Divorce? The 6 worst money mistakes", Leslie Thompson, Sept. 23, 2014

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