After years of helping families work through the financial implications of divorce, we have seen people get through the process feeling empowered and confident, and we have seen people make some very costly mistakes.
Here are the 7 mistakes people make when getting a divorce:
- Trying to use financial negotiations to get revenge. For instance, you may feel that since your spouse left you, you want to bankrupt them. As much as you may want to seek revenge – don’t. It could end up costing you in the long run.
- Forgetting you are the decision maker. Don’t let someone talk you into a financial settlement you can’t live with. You have a voice and should be heard. Don’t let anyone push you around. Not your spouse, your attorney, your friends, or even your kids.
- Trading short-term wins for long-term goals. For example, a common mistake is trading a pension benefit in retirement for the marital home. The house is an ongoing expense – a potential liability. The pension benefit is an asset. We can show you the financial projections under different scenarios, so you can make an informed decision.
- Overlooking the impact of taxes. Not all assets are created equally, especially when taxes are involved. Be sure you know the difference in taxes between qualified assets, non-qualified assets, and non-qualified tax deferred assets. All these have different rules regarding taxes and how they can be divided.
- Throwing in the towel. Saying things like “I give up, you can have whatever you want.” Or “I’m afraid I will lose everything, so I will take whatever you will give me.” It’s a mistake and it could cost you a lifetime of savings.
- Disregarding the data gathering process. A shoebox full of receipts and a shrug of the shoulders will probably end poorly. Be prepared – and if you need help getting organized, contact our office.
- Wanting a guarantee. This comes from the fear of not knowing what’s next. What if my spouse dies and I was relying on them for child or spousal support? What if my spouse decides they want more money? What if the stock market goes down? While few things in life are guaranteed, through proper financial planning and running projections of your finances under a multitude of scenarios, we can help you understand the real risks and how to reduce them.
Clients who understand the financial aspects of the divorce process are much more likely to feel empowered and confident. If you want help, contact us to request a complimentary initial consultation.