We all know that divorce is expensive, but there are a few common mistakes that make it even more costly. Although you will be tempted to get your divorce over with as quickly as possible, it is essential that you take your time and obtain the legal advice and financial guidance that you need.
Below are six common financial mistakes to avoid in order to protect your finances in your divorce:
- It is important to educate yourself about all of your marital assets. You cannot negotiate a fair settlement if you don’t have all the information regarding the property and assets you own. An experienced divorce attorney can help you understand how to obtain an accounting of retirement accounts, business interests, stock options, and other complex assets.
- You must understand what taxable assets and nontaxable assets are in order to obtain a fair settlement. The tax consequences involved in dividing marital assets can be significant.
- When your divorce is final, you must make sure your finances are truly divided. This includes unlinking joint accounts and beneficiary designations. You should also order a credit report to confirm that all accounts have been handled properly.
- If you have a retirement account, you should strive to keep it intact. In other words, don’t take out a loan from your 401(k) to pay off divorce debts. Divorce is tough on your finances, so you want to safeguard your retirement savings, especially if your divorce later in life.
- When you are negotiating the divorce settlement, you must be realistic in assessing your post-divorce finances and what you will be able to afford. For example, don’t fight to keep the house if you cannot afford to pay the mortgage loan. Obtaining appraisals and other objective valuations of assets can be beneficial.