Considerations

• Parties to a divorce should consider the best interests of any children, including who retains possession of the family home. In many cases, however, the family home is no longer affordable. The divorcing couple should also carefully consider the likely future tax brackets of each party. This is useful for determining the optimal mix of child support vs. alimony payments. Divorcees must consider the effect of divorce on Social Security benefits as well.
  
  

Alimony vs. Child Support

• Alimony is intended to keep the financially disadvantaged spouse in the lifestyle to which he or she has become accustomed. It has historically had value because women have traditionally made career sacrifices in order to tend to the home and raise children. As they spend time away from the workforce, their skills atrophy and they command lower incomes if and when they enter the workforce. Courts have long recognized the value a homemaker contributes to the marriage, however, and still authorize alimony to the financially disadvantaged spouse. Alimony is taxable to the recipient, but it is tax deductible to the payor. Child support, on the other hand, is not taxable to the recipient nor to the payor. If the payor is going to be in a much higher tax bracket than the recipient, it may make sense to allocate a higher percentage of transfers to alimony, rather than child support, depending on the circumstances.
  
  

Social Security

• Widows and spouses are generally entitled to 50 percent of a worker's Social Security benefits. But you must be married at least 10 years to qualify. If you are very close to the ten-year mark, but have not reached it yet, a divorce now could be a very expensive decision in the long run.
  
  

Life Insurance

• You may wish to change beneficiaries on your life insurance policy in the event of a divorce. Nevertheless, divorced spouses frequently retain a need for life insurance on one another -- especially when children are involved. Regardless of any hard personal feelings, the surviving spouse is generally the custodial parent in the event of a death, and will need income to provide for the children and for possibly having to take time off work. Additionally, judges frequently require life insurance to assure the receiving spouse that needed alimony and child support payments will continue.
  
  

Health Insurance

• Most American workers get health insurance for their families through the workplace. COBRA laws allow for the continuity of health insurance for spouses and family members in the event of a divorce. If you should become divorced, ask your spouse's employer about qualifying for COBRA health insurance continuation coverage. However, if all parties concerned are in good health, you may do better shopping for health insurance on the open market.
  
  

Pension and Retirement Assets

• Divorced spouses are generally considered to have a share in retirement assets accumulated during the marriage, including pensions. In the event of a divorce, judges frequently award a portion of accumulated pension or retirement funds in a lump sum under a Qualified Domestic Relations Order (QDRO).