Avoid these financial mistakes during divorce
Divorce can be a mentally and emotionally overwhelming experience. Amidst the confusion and the high stakes typical of a divorce, it is easy to make mistakes that can profoundly impact the rest of your life.
Therefore, it helps to know what to do and the things to avoid to help protect your interests before, during and after the divorce. Below are some common financial pitfalls that you should avoid.
Being dishonest about finances
It can’t be tempting to lie about certain things regarding your finances or assets. For instance, you may think of failing to disclose a secret bank account you opened during the marriage or transferring assets to a friend. However, you must be honest and forthcoming with the truth during divorce proceedings.
Hiding assets or misrepresenting facts about your financial situation can open you up to legal penalties and work against you during the divorce.
Living beyond your means
Divorce does not mean that you should burn through your savings or max out your credit cards. Your financial situation is bound to change, and it is best to stick to a budget until you have a clear picture of where you financially stand.
In addition, your expenditure preceding and during the divorce proceedings may come under scrutiny. Spending marital funds with reckless abandon because the marriage is over could reduce your share of the property you are entitled to.
Ignoring the long-term financial effects of the divorce
Do not focus solely on short-term gains. It is equally crucial to consider the long-term financial impact of your divorce settlement. For example, giving up a larger share of your retirement savings in exchange for a smaller alimony payment may not seem like a big deal now, but it could have significant consequences in the future.
Do not overlook the tax implications of the divorce either. Ensure that you can pay taxes on the assets you end up with, such as the family home.
Not seeking help
It is in your best interests to have qualified legal assistance to help navigate the entire process. With the proper guidance and legal representation, it will be much easier to avoid these and other common mistakes that could leave you in financial difficulty when the dust settles.