This article looks at three of the most common financial mistakes made during divorce and how to avoid them.
Stepping back and looking at the big picture can help avoid costly mistakes
Money and emotions are two things that rarely go well together. Unfortunately, during a divorce people are asked to make major financial decisions during what is one of the most emotionally tumultuous periods of their lives. It’s no secret that divorce can be costly, especially with most of a couple’s property being divided, but by being prepared for some of the most common financial mistakes and taking a big-picture approach, those currently going through a divorce will be able to come out on the other end with their bank accounts intact. Below are three of the most common mistakes divorcing spouses make that can have a big impact on their financial futures.
Keeping the house at all costs
A house that took two people to run is often too large-and expensive-for one person to maintain. According to USA Today, however, holding onto the family house at all costs is a common mistake many people going through a divorce make. It’s an understandable one, since many people have an emotional attachment to their house or else they may want to maintain some continuity for their children. A home, however, is expensive to maintain and giving up other assets, like retirement accounts or investment funds, just to keep the house often doesn’t make economic sense.
Not all taxes are created equal
A deal that looks good on paper can soon turn out to be a bad one in the long run, especially when taxes are factored in. According to the Wall Street Journal, even in cases where assets are split evenly based on their face value, taxes can quickly make one former spouse on the receiving end of a raw deal. It is extremely important to understand how different assets and accounts are taxed, particularly when dividing assets such as retirement funds and property that may be subject to capital gains taxes.
Revenge costs money
Finally, perhaps the most effective way of ensuring a divorce turns costly is by seeking revenge on a former spouse. Divorce is a difficult and emotional time, but trying to “stick it” to other party not only exacerbates the emotional drama, it also costs money. The longer a divorce drags on for, after all, the less money that is ultimately left to be divided between both parties.
Legal advice
The difficulty in keeping emotions out of major financial decisions during divorce is one of the main reasons why anybody going through a divorce should contact a family law attorney. An experienced and dedicated attorney can provide the perspective and expertise that divorcing clients often need to make the decisions that are in their best long-term interests. By contacting such an attorney today, those in the midst of a divorce will be better equipped to avoid some of the most common financial mistakes made by others after the end of a marriage.
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