When Tennessee residents go through a divorce, they typically think about the loss of income, legal expenses and other costs associated with the process. However, many of those same divorcees don’t realize that there are several hidden costs of divorce.
Health insurance
Paying for your own health insurance is an expensive proposition, but if your former spouse provided your health insurance through their employer, that may be your only option. In addition to COBRA insurance, which is typically available for around 36 months after your divorce, you can check the Tennessee health insurance exchange to shop around for more affordable coverage.
Real estate and mortgage refinancing
If you pursue ownership of your marital home after your divorce, you have some options, each of which leads to a significant cost increase. You can obtain the necessary funds to buy out your former spouse’s ownership stake in the home, or you can refinance the home to remove your former spouse’s name from the mortgage. Both options result in you getting a mortgage that only bears your name, leading to a hidden divorce cost and decades of debt while you pay that mortgage off.
Retirement accounts
The state of Tennessee usually classifies retirement accounts as marital assets, which means that any funds invested into a retirement account during a marriage are eligible for equitable division between the spouses after a divorce. In addition to losing a portion of your retirement account, there are other hidden costs in play.
A qualified domestic relations order (QDRO) is the form that outlines how retirement accounts get divided. QDROs typically cost around $1,000 in filing fees, adding to your hidden divorce costs.
Divorce impacts your finances in both the short and long term. Understanding the hidden costs, such as health insurance, new mortgages and retirement account division allows you to better plan for your future as a single person.