Divorce generally has financial implications for both spouses. One economist even contends that it “generally results in a significant financial setback for all those involved.”
It doesn’t have to be that way. With some planning and wise decision making, as well as the help of an experienced family law attorney and a financial advisor, people can leave an unhappy marriage and still maintain financial security.
Too many people fail to do some relatively common-sense things because they just don’t consider them or perhaps let emotions determine their decisions rather than what is actually best for them and their children in the long run.
Following are some big mistakes that too many people make that can have significant financial consequences for their future:
— Seeking revenge: It’s normal to try to get whatever you can from a spouse who left you and/or cheated on you. However, that will cost both of you more money and ultimately diminish the assets available to split. Consider the settlement discussions a business deal and not an attempt at payback.
— Getting the house: When your family’s life is in upheaval, it’s normal to want to keep the family home. However, in most cases, the house is far too costly — not just in mortgage payments, but taxes, utilities and maintenance costs — for one person to afford. Often, it’s best to sell the house and divide the proceeds.
— Underestimating family expenses: Many people who weren’t the primary money managers in the marriage don’t really know how much it costs to support themselves, let alone their children. Start tracking these expenses before your divorce negotiations. Factor in post-divorce cost increases, such as perhaps higher health insurance premiums. Don’t forget to factor in savings and an emergency fund.
— Being unaware of assets and liabilities: Spouses are legally obligated to report these accurately, but too often they don’t. Start collecting financial documents when you foresee divorce in your future. If you believe or know that your spouse is hiding assets, a forensic accountant may be a worthwhile investment.
— Not considering tax implications: While an asset division may look fair, it can stick you with a tax burden you didn’t anticipate.
Your Texas family law attorney can help keep you from overlooking these important considerations and provide guidance so that you can fight for what is truly best for you and your family.
Source: Wall Street Journal, “Divorce and Money: Six Costly Mistakes,” Veronica Dagher, May. 15, 2015