Divorce, though often considered a taboo subject in India, is a reality that many people face. Despite India having one of the lowest divorce rates globally, estimated at around 1%, the actual numbers are much higher due to many couples staying separated without filing for divorce. According to the UN, divorce rates in India have almost doubled over the past two decades. This blog, based on Sharan’s insightful YouTube video, aims to provide you with essential knowledge on navigating the financial aspects of divorce, including property distribution, child support, and alimony. Whether you are currently going through a divorce or preparing for a potential future scenario, these insights will help you protect your financial interests.
Types of Divorce in India
1. Divorce by Mutual Consent
Divorce by mutual consent is a more amicable way to end a marriage. Both partners agree that the marriage is no longer working and mutually decide to file for divorce. This process involves sitting together and discussing all terms and conditions of the divorce, including child custody, maintenance, and division of property. Once agreed, a joint petition is filed in court. This type of divorce is typically quicker and less costly because both parties aim to conclude the process swiftly.
- Example Case: Rohan and Priya decided to divorce amicably. They sat down, discussed who would get the house, how to handle child custody, and the division of their savings. They filed a joint petition and their divorce was finalized within two months through a mediator.
2. Contested Divorce
A contested divorce occurs when one partner does not agree to the divorce or the terms proposed by the other partner. This type of divorce can be lengthy and expensive, as it involves multiple court hearings. The costs can escalate, especially if hiring high-profile lawyers, and the process can take years to finalize.
- Example Case: Anjali wanted a divorce, but her husband, Raj, did not. Anjali filed for divorce individually. The process took three years to finalize, during which they had to attend numerous court hearings, significantly draining both their finances.
Property Distribution
Understanding Ownership and Division
- Stridhan: Gifts given to the wife at the time of marriage and during her marriage remain her property. This includes cash, ornaments, movable and immovable property received from her family, friends, or in-laws.
- Example Case: Pooja received a house as a gift from her parents during her marriage. In the event of a divorce, this house legally remains Pooja’s property.
- Joint Assets: Properties jointly owned by both spouses are divided by the court, usually on a 50-50 basis unless specified otherwise in the agreement.
- Example Case: Amit and Sunita bought a house together. Amit paid 60% of the EMI while Sunita paid 40%. Since the house was under joint ownership, the court initially considered a 50-50 division. However, Amit presented documents proving his higher contribution, resulting in a division based on their actual contributions.
- Benami Transactions: Properties bought in the name of the spouse can be contested. If the husband can prove the property was bought with his known sources of income, it may not be considered a benami transaction, and ownership can be reclaimed.
- Example Case: Rajesh bought a house in his wife’s name before 2016. During their divorce, he proved it was bought with his income. The court ruled in his favor, recognizing him as the rightful owner.
Liquid Assets
Liquid assets such as savings accounts, fixed deposits, and mutual funds are divided based on ownership and contributions.
- Individual Accounts: If owned individually, these assets are typically not affected unless involved in alimony calculations.
- Joint Accounts: Similar to joint property, joint accounts are divided equally unless specified otherwise.
- Example Case: Suresh and Rina had a joint savings account. Without a clear agreement on their contributions, the court divided the savings equally.
Child Support and Alimony
Child Support
The law requires a man to provide maintenance to his child and wife post-divorce. However, if the wife is financially stable, she may not receive child support even if the child custody is with her.
- Example Case: Kavita, a well-earning professional, got custody of her son. Despite this, her ex-husband, Raj, was required to contribute to the child’s expenses until he turned 18.
Alimony
Alimony is financial support provided by the higher-earning spouse to the lower-earning spouse. The amount is determined by the court based on various factors such as the financial status of both parties and their assets.
- Example Case: Nisha, a homemaker, divorced her husband, Arjun, a successful businessman. The court ordered Arjun to pay 25% of his monthly income as alimony to Nisha, ensuring she could maintain a similar lifestyle post-divorce.
Pre-Marital Financial Tips
1. Create a Family Trust
Family trusts allow you to transfer your assets while still enjoying their benefits, protecting these assets from being claimed in a divorce.
- Example Case: Rakesh created a family trust before getting married. During his divorce, his assets in the trust were protected, and his spouse couldn’t claim them.
2. Make a Will
Creating or updating your will during divorce proceedings ensures your assets are distributed according to your wishes, not default laws.
- Example Case: During his divorce, Sanjay updated his will to exclude his estranged wife, ensuring his assets were inherited by his children.
3. Protect Your Credit Score
Divorce can indirectly affect your credit score if joint loans are not managed properly. Ensure your name is removed from joint loans and accounts.
- Example Case: After his divorce, Anil ensured his name was removed from the joint home loan. This step protected his credit score when his ex-spouse missed a few payments.
4. Manage Insurance Policies
Policies under the Married Women’s Property Act ensure the proceeds go to the named beneficiary, even after divorce. Adjusting beneficiaries in your insurance policies can prevent your ex-spouse from receiving benefits.
- Example Case: Priya changed the beneficiary on her life insurance policy from her ex-husband to her brother, ensuring her ex could not claim the insurance proceeds.
Divorce is not just emotionally challenging but can also be financially draining. Understanding the financial implications and preparing accordingly can save you significant stress and money. Whether you are contemplating divorce or want to safeguard your finances before marriage, these strategies will help you navigate the complexities of divorce more effectively.
By understanding the different types of divorce, knowing how to handle property and liquid assets, and preparing pre-marital financial strategies, you can protect your financial well-being. Remember, the goal is not to seek revenge but to ensure that both parties can move on with their lives without financial ruin.
If you have any questions or need further assistance, feel free to reach out. And if you’re going through a divorce, remember to take care of your mental and emotional health as well. Financial planning is essential, but so is your overall well-being.
