Financial Mistakes Made in Divorce and How to Avoid them With a Lawyer
Divorce can be a difficult experience for anyone. Divorce difficulties between both parties include how assets will be broken up. On top of that, who will be responsible for debt and costs. Having a lawyer during your divorce is vital as you make a life-impacting financial decision. We’re here to help you stay aware of what could go wrong in a divorce case by discussing the most common financial errors.
When you separate from a partner, you should expect to see a dramatic change in expenses. Most people know exactly how much they earn on a monthly basis but don’t know where their money goes. To keep track of your expenses, take the time to write down where your money goes. That way, you can plan for future living expenses.
Misvaluing Marital Assets
Property can be valued in many ways. It can become especially complex in a divorce case. This is why each spouse needs to obtain their own independent evaluation of significant assets for fair division. To ensure that assets are divided fairly, your lawyer can introduce a mediator, an arbitrator, or a judge to view valuations.
Not Receiving a Fair Share of Retirement Assets
Spouses may have their own retirement accounts, considering that these accounts cannot be jointly owned. Although, there could be significant differences in the amount of assets in each account. If there is a significant difference, a qualified domestic relations order (QDRO) could be introduced to the case to divide assets fairly.
Believing the Parent with Custody Should Keep the Family Home
All too often, emotions come into the picture when deciding who keeps the family home. Especially when both spouses share children. Of course, staying in the family home always seems the easiest and most comfortable decision. It doesn’t necessarily mean that it is the smartest financial option. It is critical to have a realistic sense of whether you can afford it and if it suits your plans with your family.
Failing to Secure Spousal Support (Alimony) and Child Support Payment with Insurance
To collect alimony and child support is only as good as whether your spouse is able to provide. You can request your spouse to obtain disability or life insurance policies to make sure you are receiving payments in the event your spouse has a disability or death. Be sure to take the time to review the policies to make sure your spouse has made the proper designations.
Not Considering Long-Term Financial Security
If you focus only on the immediate task of splitting assets, you are doing a great disservice to yourself in your divorce case. This is why it is important to have a lawyer with you throughout the divorce. A lawyer can review any proposed settlement agreements, even before you sign documents. Then, let you know how these agreements will play out.
Not Knowing Your Liability for Unsecured Financial Debt
For most people, married or not, unsecured debt simply refers to how much they have spent with credit cards and how much they owe. When filing for divorce, the responsibilities for paying off these debts will be divided. In most divorce cases, if the debt was accrued during the marriage, it is a shared responsibility for the spouses to pay off credit cards. No matter if it was only one spouse using the credit card. It is recommended to try to pay off all debts shared between you and your spouse before the divorce is final.
Assuming that Equal Division of Assets is Fair Division
The way that assets are divided is to depend on several factors. You want to pay attention to tax bases, present values of assets (considering they can change from initial market values), and transaction costs. If somehow, in your case, assets are divided equally, it is important to make comparisons and show why you should be paying less or be responsible for less.
Working on Financial Issues Separately, Not All at Once
When you finally discuss finances in your divorce case, you should be looking at assets and income altogether, not at different points throughout the case. If you sort financial issues out separately, you could miss important factors to cover, such as taxes, capital gains, investment losses, etc. A fair divorce settlement includes looking at finances altogether.
We’re Here to Fight for What’s Rightfully Yours. Contact Us to Get Started
We have helped many people in divorce cases and family law overall. If you are going through a divorce, talk to a divorce attorney at our law firm today. We’ll take care of the hard work for you. Contact us to tell us about where your divorce stands.