The stress associated with COVID-19 and the resulting economic downturn has pushed a lot of relationships that may have already been strained to the breaking point. Statistics show a rise in divorce cases during the pandemic. However, in this global crisis, splitting is harder for both practical and financial reasons. Marital asset division is already quite challenging in the best of economies, especially when real estate and businesses are involved. This complexity has significantly increased during the COVID-19 pandemic. Keep reading to know the financial impacts of divorce during the pandemic:
Loss of Income
The court will look at the resources the divorcing parties may have in the foreseeable future. Because of the pandemic, the government created a law that prohibited landlords from evicting tenants as long as they pay a certain percentage of their rent. This decrease in net operating income could translate into a devastating loss of income for divorce and divorcing couples. A Centennial family lawyer has to deal with this for months as they take calls from clients who accepted real estate assets as part of a divorce settlement.
Additionally, those who live in high tax states face higher costs of living increases. This results from the higher taxes that businesses have to deal with.,
Courts may still look at any maintenance payments to balance any inequality in the income of the divorcing parties; however, they may delay its implementation. Courts will try to work toward parties being financially independent.
How these Impacts can be Addressed
Individuals need to be prepared to re-think and re-adjust historical financial models to account for this possible scenario. Thus, couples must look deeper into hard asset valuations like businesses and real estate to make sure new variables and factors are taken into account. For divorce lawyers and advisors, this means establishing various approaches to uncover the real value of a business, real estate, and hard assets. They may need to bring new expertise to the table to determine value to ensure divorcing couples will reach a fair and equitable resolution in dividing marital assets and calculating spousal support obligations.
Should Couples Settle or Wait?
Those who are negotiating and haven’t reached a financial settlement may want to consider delaying negotiations. However, this will depend on the marital assets. If divorcing couples have started discussions before the COVID-19 pandemic, they must get up-to-date valuations, so negotiations occur with accurate figures. Also, this ensures valuations consider any effect the pandemic may have on them.