On September 20th, Angelina Jolie filed for divorce from Brad Pitt, bringing an end to Brangelina, Hollywood’s golden couple. Fortunately for these two, the break up won’t make much of a difference in their financial security, but that is not the case for the average family going through this painful experience.

Divorce rates in the US are actually down, according to data from Justin Wolfers, a University of Michigan Economist. If current trends continue two thirds of marriages will never end in divorce. That is the good news. The bad news is for those relationships that do end in divorce the financial toll can be devastating.

The average cost of a divorce trial can run between $15,000 and $30,000. In some cities, the cost is much higher. But that is just the beginning. After the divorce, previously shared expenses are no longer shared. To maintain the same lifestyle after divorce as before will cost you about 30 percent more.

The financial impact of divorce can be particularly difficult for women. According to a 2009 US Census Bureau study, recently divorced women reported less household income than recently divorced men, and women were more likely to live in poverty. Three quarters of children of recently divorced parents lived with their mothers, and were more likely to be living in poverty than other children.

Divorcing late in life also has repercussions. Splitting retirement savings means both partners have less to retire on. While younger couples who divorce have time to rebuild their savings, those 50 and older don’t. Divorce impacts the total social security benefits paid to a household as well. Where the average social security income for couples who were continuously married was $22,607 in a 2010 study, the average for those who had been divorced and remained unmarried was only $12,000. For women who divorced after 50, the average social security income was less than $11,000, and 27 percent lived in poverty.

Money should not necessarily keep you in a bad marriage, but thinking through the financial impact of a break up a head of time can help maintain your financial security after. Here are a few things to consider before making the break, that can make life afterwards a little less difficult.

1. Develop a post divorce budget. Mark gained custody of his two boys after his divorce and made spousal support payments for five years. The increased cash outlay didn’t keep him from pursuing his goal of an early retirement. Mark cut his other expenses to the bone while providing a stable and comfortable home for the boys. They didn’t have cable television or the latest in video games, but they enjoyed lots of time with their dad. As the spousal support payments declined, Mark was able to gradually reintroduce some luxuries and is on tract to meet his early retirement goal.
2. Understand your financial situation before you start down the divorce path. If possible clear joint debt before you divorce. At the very least open new credit card accounts in your separate names and transfer the old balances between them. If you have car loans or other debt separate those as well. Regardless of who is supposed to pay the debt according to the divorce agreement, creditors can pursue you on joint accounts if your former spouse doesn’t pay. Chelsea found out the hard way that her husband had run up some large credit card bills without her knowing. After her divorce she spent two years working two jobs to pay off the debt.
3. The divorce is not the place to get your revenge. No one wins, except the attorneys, when you use the legal process to inflict pain. Regardless of how hurt you feel, take the emotion out of the divorce. Consider it a business transaction. If you and your spouse can agree on how to divide your property, the cost of your uncontested divorce could be as little as $200, about 1 percent of the average contested divorce.
4. If you own a house, it is likely a better idea to sell it before the divorce than for one spouse to get it in the divorce. If you get the house, you may get less in financial assets or you may have to buy your spouse out by refinancing. Either way, you’ll have less income and won’t have reduced your expenses. If you sell the house, the proceeds can be split and used for a down payment for each of you on a new home that will fit within your new smaller budget. If you agree to sell at a later time, you may create an opportunity for further conflict. Sharon and Russell agreed to keep their house in both their names until the kids were out of the house. Then Sharon would sell it, and they would split the proceeds. When Sharon was ready to sell, Russell refused to sign the transfer papers until Sharon made concessions to their divorce agreement.
5. When dividing assets, keep an eye on future tax consequences. Traditional IRAs and 401(k)s will generally be fully taxable upon withdrawal, while Roth and non retirement accounts will not be. If you have both types of accounts take the tax consequences into account when dividing them. Once the accounts are divided, make sure to update your beneficiaries. Elaine was devastated when her husband’s IRA went to his ex-wife when he passed away because he had failed to change the beneficiary.

Divorce is painful and costly in so many ways. You have to establish a whole new life for yourself, and that means new hopes and dreams and financial goals. It’s easy to leave off that last one, but it’s a critical piece given how financially costly a divorce can be. Knowing your financial situation, developing new savings goals and creating a plan to get back on track while protecting yourself from future uncertainties will help you manage the divorce better and maintain your financial security after.

Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net