Roughly forty to fifty percent of all married couples will eventually divorce. Getting a divorce can have a large fiscal impact on any individual’s overall financial picture. The right legal help can make sure that such financial dangers are minimized as much as possible and that both parties involved in the divorce receive a fair settlement.
Here are four common financial dangers people face.
1) Not giving adequate thought to property division
Many people have financial assets they owned outright before they were married or that they received as an inheritance during marriage. It is imperative for any participant involved in a divorce to make sure that such assets are divided properly. For example, if one party owns a house they bought before getting married, they need to make sure they can fully retain any equity built up in the house before they entered into the marriage.
Then, all assets that have been accumulated during the marriage need to be equitably distributed. For longstanding marriages, this could include less-obvious assets such as Social Security and pension assets. Furthermore, even when there is an equitable split, the type of property each spouse receives can make a difference. Some assets are liquid and some are illiquid. Some can be sold and some cannot. “It comes out in the wash” is not an expression you should ever say or hear during divorce.
2) Not paying attention to the tax impact of property division
There is a difference between a brokerage account and a tax-deferred retirement account, and it all comes down to taxes. Pay attention to the income taxes, property taxes, alimony taxes and other tax issues in divorce. An attorney can help you spot the issues and factor it into your property division.
3) Fighting away the money
Divorce is emotional. Sometimes, it can be so emotional that it destroys common sense. Don’t spend thousands of dollars fighting over a dresser worth $150. By going into this with the mindset that you are going to “stick it to” your spouse, you set the stage for a gruesome battle that will cost you much more than it is worth.
While going to court is sometimes essential, particularly when domestic abuse, abnormally high assets or power struggles are involved, court isn’t the best option for everyone. There are other less contentious ways to get through this and on with your life. Consider, for example, mediation. During mediation, you and your spouse will meet with a mediation — often in separate rooms — who will help you negotiate a mutually agreeable plan.
4) Not putting your children first in child support disputes
Couples who are going through a divorce and have children need to be sure that all of their children’s needs are provided as the divorce process is completed. Raising kids is very expensive. Both parties should be held fiscally responsible for the financial needs of their kids. Child support doesn’t come down to ‘what your children need to survive,’ but what they need to maintain the quality of life they had during the marriage.
An attorney can help
The entire process can be highly stressful and lead to potentially poor decision making if done recklessly or with disregard to what can be divided under the law. A divorce attorney can help ensure you get your fair share of the assets. A good lawyer can help make sure that each member of the couple is compensated accordingly and appropriately.
