How to stay clear of some common money mistakes during divorce
Preparing for some common financial challenges can help ease the pain
People going through a divorce often fail to appreciate that divorce is, in the eyes of the law, very much the end of a financial partnership. As such, a divorce that is rushed into and not prepared for exposes people to a host of financial challenges. As USA Today recently reported, there are a number of mistakes that many spouses going through a divorce tend to make. By looking at some of the most common divorce money mistakes, people considering or currently involved in a divorce will be better prepared to meet these challenges once they arise.
Not looking at the big picture
Divorce can be an overwhelming experience, which is perhaps why many people tend to get caught up on minute details since the larger picture can feel like it is too much to handle. Major decisions, such as property division and child custody, can soon be made extremely difficult by finer questions related to tax implications and other details. Of course, these details are important, but it is vital to keep the bigger picture in mind throughout the divorce process.
Similarly, according to NBC News, people should work out not just how a divorce is going to affect them in the immediate future, but how the new financial reality of post-divorce life will ultimately play out for them in the long term. For example, new daycare options may need to be looked into or a newly-single parent may have to start looking for a job again. Such long-term concerns raise financial questions that can at least be partly addressed during the actual divorce.
Is the home worth it?
Perhaps the biggest asset that many divorcing spouses get hung up on is the marital home. Divorces can sometimes become long and bitter when spouses clash over who will keep the house. While the house is often a couple’s biggest asset, these conflicts are often related more to emotion rather than sound financial planning. Many people have a sentimental attachment to their home that they don’t want to part with.
But hanging on to the home no matter what is not always advisable. A large family home may be a big asset, but it can be expensive to maintain, leading many divorced spouses ‘house poor.’ Furthermore, there are often hidden expenses to be taken into account. A rental property, for example, can bring in some immediate income but it may be subject to capital gains tax if the owner decides to sell the property later on.
Money and divorce
When handling these difficult financial concerns during divorce it is important to talk to the people who understand how divorce and finances intersect. An experienced family law attorney can help people going through a divorce understand how the legal considerations of a divorce could ultimately impact one’s financial situation.