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Financial consequences after divorce

Aug 08, 2023
3 min reading time

Divorce brings great emotional consequences and requires many arrangements, with the financial impact often underestimated. In fact, it can be one of the most common causes of financial problems.

Divorce often involves costs such as attorney and mediator bills, and filing for divorce with the court. While these are one-time costs, the long-term financial impact is often much greater. The joint home and retirement are especially important concerns. Also, don't forget to properly arrange insurance.

 

Impact divorce on car insurance

After a divorce, claim-free years can only be transferred to one partner, which can significantly increase the car insurance premium for the other. Even if both partners had their own cars, car insurance can be more expensive after divorce, depending on the situation.

 

Importance of term life insurance (ORV)

It is wise to think carefully before canceling your term life insurance. Especially if one of you is entitled to alimony, canceling the ORV can be risky. After all, if your ex-partner dies, the alimony will lapse, but the ORV can fill this financial gap. Get proper advice on this.

 

Adjust or cancel joint insurance policies.

In a divorce, joint insurance policies should be scrutinized. In some cases, these must be changed or cancelled. Don't forget to take out new insurance policies yourself. Among other things, liability insurance, household insurance, life insurance, home insurance, legal expenses insurance and travel insurance deserve your attention.

 

A joint home in divorce

A joint home can cause problems in a divorce because both partners are jointly and severally liable for the mortgage. To separate from each other and the mortgage, steps must be taken, such as selling the home and paying off the mortgage in full. If one of you wishes to remain in the home, the other must be released from joint and several liability, which can be arranged through the notary. However, this requires sufficient income from the surviving partner to bear the mortgage expenses alone.

 

Distribution of pensions

With both of you employed, there is a good chance that you will accrue old-age pension. The retirement pension accrued during the marriage is usually divided equally, unless other arrangements have been made. This division can have major consequences for future finances, as there may suddenly be much less pension available. So be well advised about the division and the consequences.

 

In a divorce, other property, assets and debts must also be divided. This can be complex, where a mediator or lawyer can help. If you have questions about your mortgage, insurance or retirement during the divorce, our advisors are happy to help. We can also help you understand the overall financial picture after the divorce.

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