When people think about the costs of divorce, most focus on attorney’s fees and court costs. What people don’t realize is that the hidden costs of divorce can be far more expensive. Hidden costs of divorce commonly result from changes to income and taxes, alimony and child support payments and adjustments to other assets like retirement savings. When thinking about divorce, it is important to consider these hidden costs.

First burden: splitting the family home

One spouse may move out of the family home after deciding to divorce or perhaps even before . This move reflects a major shift in the finances for each spouse. Both spouses will go from living off of two incomes in one home and sharing expenses to living separately. This means that each spouse must now use his or her single income to pay for housing and related expenses. This is a major increase in living expenses that often occurs before a divorce is finalized.

How divorce affects retirement and other savings

Another hidden cost to divorce is the division and use of investment assets. In some cases, spouses may need to sell stock, bonds and other assets to split assets with their former partner. Others may sell investments to pay for short-term needs like housing.

Selling investments or taking early distributions on retirement accounts often has negative tax implications. Selling stocks and other investments may require a spouse to pay capital gains taxes. Taking early distributions from retirement accounts not only may increase taxable income, but may also incur an early-withdrawal penalty.

Spousal and child support costs

Sometimes, one spouse earns much more than his or her former partner or the former partner has not worked in many years. This may be especially true for older couples who are divorcing. In these cases, it is possible that a court will order the spouse with the higher income to pay spousal support to the other spouse. This support is usually established as a temporary measure to help the lower-income spouse get on his or her feet after divorce.

Alimony payments are usually determined by several factors, including the length of the marriage, the ages of the spouses, the employment situation of both spouses and the sum of other assets available to the lower-income spouse. However, alimony determinations are subjective and vary depending on the judge.

Child support orders may also be a divorce expense. Child support is decided before alimony payments and will last until children reach the age of majority in most cases. In New Jersey, family courts use the need for child care, medical insurance expenses and other factors to determine the monthly child support payment. If a parent does not agree with the court’s order, both parents must go to family court, incurring more costs.

Child support is not reported as income by the spouse who receives it, nor can it be deducted as an expense by the spouse who pays it. On the other hand, alimony payments count as income to the receiving spouse and as a deduction for the paying spouse.

Divorce costs extend beyond court and attorneys’ fees. It is important to understand all the hidden costs of divorce before filing for one. To learn more and to minimize the costs you will bear, contact an experienced family law attorney.