Common Financial Mistakes Divorcing Spouses Make
Whether you are getting a divorce or considering filing for one, it’s important to keep your financial stability in mind. This can help you avoid financial mistakes that can cost you in the long run. It’s not uncommon for people to make rash decisions during an emotional time like divorce. Unfortunately, this often leads to costly mistakes that can have serious consequences for your financial future. In the rush to get a divorce over with, people commonly give up assets they should not have. They also make hasty decisions that they later come to regret, such as trying to punish their spouse or making other retaliatory financial moves. That is why it is important to consult with a divorce attorney.
Not Understanding Marital Finances
The most common mistake divorcing spouses make is not fully understanding their marital finances. This is especially true when one spouse handles the majority of the family’s finances, balancing budgets, managing accounts and tracking investments. This lack of knowledge can put a spouse at a disadvantage during the divorce process, as it can be difficult for them to determine what assets they have and what their value is.
It’s also a big mistake to assume that all assets are equal. Many assets, such as retirement and investment accounts, have specific tax implications that must be considered. This can significantly reduce the amount that a person receives when they split them with their partner. Additionally, the value of some assets, such as real estate or stock, can change over time. For this reason, it is important to hire professionals to accurately valuate the worth of each asset before deciding what to keep or not.
Forgetting About Unsecured Debt
As you know, the court divides all assets during a divorce. However, many spouses overlook the fact that they are jointly liable for unsecured debt. This means that credit card companies can contact both spouses after a divorce and require payment for the balance. For this reason, it is wise to have all joint debt paid off before the divorce is finalized.
Overestimating Post-Divorce Expenses
Another common mistake that spouses make is overestimating their post-divorce living expenses. This is a problem because it can affect the amount of alimony and/or child support awarded. It’s a good idea to work with a holistic wealth advisor who can help you evaluate different living costs and predict what your monthly expenses will be after the divorce is complete.
The most important thing to remember during a divorce is that life isn’t fair. As such, it’s a good idea to consult with a divorce attorney and a holistic wealth advisor to ensure that your interests are protected. This will help you to avoid the financial pitfalls that can be associated with divorce and put you in a better position to start your new life on the right foot. For more information about financial planning and divorce, please do not hesitate to contact us. We would be happy to answer your questions and help you navigate the complex issues that arise during a divorce.