What to Consider Before You Consider Divorce

Financial planners say people contemplating divorce should count the potential financial costs before moving ahead. Consulting an attorney and an accountant before filing for divorce is often wise. Among the financial aspects to consider:

* Cash flow. Money may be tighter during and after divorce. You may need to take out loans or sell assets to pay property settlements, alimony or child support.

"You have two households living on the same income as before," said Violet Woodhouse, a certified financial planner and divorce attorney. "You have to look at where you're going to live and how you're going to change your lifestyle."

* The house. Expect a tussle over who gets it. A 1997 tax law change that allows individuals as much as $250,000 of tax-free profit on home sales has made the house a much more valuable asset in most divorce negotiations, Woodhouse said.

* Retirement accounts. The portion of a retirement account or pension that is earned during a marriage typically must be divided during divorce. That can mean less money at retirement, or having to work longer in order to retire.

* Debts. California is one of nine community property states, which means that both assets and debts accumulated during marriage generally must be split equally in a divorce.

* Health-insurance coverage. People with preexisting conditions may find it difficult or expensive to get health insurance if they are dropped from an ex-spouse's plan. Once divorced, you can generally remain on your ex's insurance for only three years.

* Social Security. People who are married at least 10 years and then divorce can qualify for Social Security benefits using their ex-spouses' earning histories. Those already receiving spousal benefits will lose them after divorce if they were married less than 10 years.

* Legal fees. The larger the assets, the longer the divorce proceedings and the less willing the spouses are to communicate and compromise, the more expensive divorce will be.