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The Basics

Your 5-minute guide to sudden singlehood

Continued from page 1

Alimony and child support

Also called "spousal support," alimony is paid by one spouse to the other so that he or she can maintain the standard of living that was enjoyed during the marriage. Alimony is at the discretion of the judge and differs from state to state.

  • Alimony is tax-deductible to the person who pays it and taxable income to the person who receives it. If you and your spouse have dramatically different incomes, alimony may have tax advantages. (See "Alimony offers a less taxing alternative.")

  • Child-support payments are neither deductible by the payer nor taxable to the recipient.

  • Child support fluctuates only when it is changed by court order.

  • Decide who gets to claim the children as exemptions on their tax return and consider what that decision does to the eligibility of funds for college.

  • A custodial parent can't refuse or cut back visitation if child support hasn't been paid.

The details: Insurance, cars

In case of death or divorce, one person can end up uninsured. You do have options. (It may be best to assess your needs first.)

  • If you are on your spouse's insurance, get a checkup before the divorce is final.

  • Stipulate that your spouse carry insurance on your children.

  • Elect COBRA, which is continuing your coverage on your spouse's insurance plan. You'll have to pay 104% of the policy cost, but it can cover you for up to 36 months.

Purchase an individual health-benefits plan. You will pay the monthly fee on your own, but you won't be tied to your spouse's insurance.

Video on MSN Money

Divorce © Corbis
Sudden financial change: Divorce
Life is full of changes, both good and bad. You may be ready to end your marriage, but are your finances ready?
Lastly, don't forget to:

    • Fix the car. Before you separate, get your car in good working order. That makes one less expense you'll have to cope with right away. After you decide who gets which car, don't forget to put the title in your name.

    • If your paycheck or other income is automatically deposited into a joint account, open a single account and change the automatic deposit.

    • Change beneficiaries. Despite what your divorce decrees, if you don't change beneficiaries on all documents, your ex could land a windfall in the event of your untimely demise. If a consent form must be signed, do that before the divorce is final.

    • Reclaim your name. If reverting to your maiden name, don't forget to register your name change (and adjust withholding) on your W-4 and other tax forms and with the Social Security Administration.

    If you've got a hint we haven't included or find a factual error, let us know by sending an e-mail to Five.minute@hotmail.com.

    Updated May 26, 2009

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