Divorce is more than just the ending of a romantic relationship. By the time some couples decide to part ways, their financial entanglements can be extensive and difficult to separate. Making the wrong moves during divorce might impact you negatively now and in the future if you aren't careful. Read on and don't let these financial mistakes complicate your divorce.
- You want the home – but not the problems that come with it. Homes represent stability and security: two things divorce can put in jeopardy. Unfortunately, sometimes you would be better off focusing on other marital assets that may be more valuable to you in the future. Take into consideration the full cost of homeownership rather than the emotional need for staying in the home.
- You anticipate budgeting issues – but fail to update your budget. No matter what happens with marital property and debts, your financial situation is about to change dramatically. The sooner you face facts and make out a new budget, the more informed you can be about financial matters going forward. To get started, make a list of your debts and assets and the difference between the two. That is your net worth. Then create a new monthly budget reflecting your new income and bills.
- You understand what marital assets are – but fail to see how some assets are more valuable than their obvious worth. For example, cash in a savings account is nice but a rental property could appreciate and produce income for years to come. Additionally, consider the tax consequences of owning certain assets. It might be helpful to talk to an accountant before you decide what you want to ask for in the divorce.
- You are envious of your spouse because they have a nice 401(k) balance – but you fail to take advantage of a QDRO. A qualified domestic relations order (QDRO) allows the non-owing spouse an opportunity to be paid some (or all) of the funds in a 401(K). Retirement accounts are marital property so speak to your lawyer if your spouse has one.
- You and your spouse have credit cards – but you are not sure what is going on with your spouse's spending during the divorce. Some divorcing spouses fail to put a stop to the spending and then have an additional financial burden afterward. As soon as you decide to divorce, get a legal separation agreement in place that prevents you from having to responsible for any additional spending from your spouse.
Your attention to these matters can help you ensure your future is financially secure. Speak to your divorce lawyer about the above and other issues.
What do family lawyers really do? Most people know that they help clients in divorce proceedings, but this is only a small piece of their job. These attorneys also help draft custody arrangements, create adoption contracts, formulate prenuptial agreements, and designate alternative guardianship of kids in situations of abuse. As you can probably guess, working as a family lawyer requires tact, compassion, and an endless drive to do good. We are passionate about the work that these attorneys do, which is why we chose to write about that work on this blog. Our hope is that in reading these articles, you will also develop an improved understanding of family law.