Divorce: Here’s how you can ensure money matters don’t turn messy

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The meaning of divorce is not limited to the separation of husband and wife. Besides taking a toll on mental health, it also has financial consequences. Sometimes a major reason behind couples seeking divorce is financial issues. Speaking on this issue to Money9, FinFix founder Praleen Bajpai feels that the tension between husband and wife over expenses is a major reason behind separation. From wasteful spending to giving money to parents, there can be many reasons for differences cropping up in a marriage.

Rising divorce rates

Data suggests the divorce rate in India is only close to 1% with 13 out of every 1,000 people seeking divorce. On the other hand, in developed countries, this number is 45-50%. But, it is difficult to ascertain the exact figures of divorce in India because many choose not to take the legal route of separation.

After the onset of the Covid-19 pandemic, there have been reports rise in divorce rates from different states.

Goa’s Law Minister Nilesh Cabral recently said marriages are breaking up in Goa every 15 days. In the family court of Kochi, 20-25% more divorce cases were registered in 2020 while in Visakhapatnam this number is 30% more.

Financial checklist

According to Praleen Bajpai of FinFix, couples should make a list of expenses, assets, investments, loans, bank accounts and insurance. Proper documentation of loans is very important as sometimes husband and wife take joint ownership of loans. The following three points need to be noted in scenarios where loan is a moot point:

— If the loan and the property are joint, then they should sell the property and repay the loan. Property and home loan transfer can also take place in the name of one partner and they can give money to the other partner according to their contribution.

— If the loan and property are in the name of one partner and he/she is paying the loan, then the other partner will not have any right over the property.

— If the loan is in the husband’s name and the house is in the wife’s name, then the husband can get the ownership of the house. The one who repays the loan gets the right over the property.

But, if the wife does not have a place to live, then it will be the responsibility of the husband to make arrangements for her stay. The wife will not own the property, but if she does not have a place to live, she can be given a room in the house.

Alimony and maintenance

There are not many fixed scales to calculate alimony. It depends on the financial condition of the couple and the responsibility of the children. Alimony is also decided on the basis of the number of years of marriage. Money can be received in the form of one time payment or every month’s expenses.

There is no rule that states only women can claim alimony. If a man is differently-abled, then he can also demand alimony. Lump sum alimony is not taxed. But if every month’s expenditure is received, then it will be considered as income and tax will have to be paid.

Praleen advises that if you get a lump sum amount, do not spend or invest it immediately and take decisions related to money matter with  a calm and composed mind.