Your Finances & Divorce

By James Jennings
DiscountDivorcePro.com

Common financial mistakes of a divorce.

Financial victim:
If you suspect that your spouse is planning to divorce you. You should make copies of all important financial records. Making copies of bank statements, charge account statements, titles and deeds should be a top priority, if you think that your spouse may sell off a re-title marital assets. You should notify the holder in writing and acquire restraining order from the court. You should also watch out for cash in joint checking and savings accounts. I've seen many cases where these accounts have evaporated, and people have been left with no way to pay their bills. If these assets are taken, legal or forensic accounting fees could become very expensive.

Emotional attachments:

Try not to get emotionally attached to assets. This is a very common mistake that I have seen cost people more money than it should. Assets like your home or your pension make for emotionally charged debates during divorce negotiations. The fact of the matter is most people can't afford a house, and usually give a low priority to their retirement planning. A house is an asset that has a very low return on investment in most cases. You need to consider that in most cases, homes are a major cash expense because of the mortgage payments. Also don't forget the taxes, maintenance, upkeep, and electricity on a house.

Impact of taxes on your assets:
Consider the value of your assets, as it relates to your spouse on an after-tax basis. Don't make the mistake of not recognizing what Uncle Sam will take. Sometimes, when going through divorce, a financial planner or tax accountant can help you minimize the total tax you will pay. Don't forget you and your spouse are both liable for taxes due on joint tax returns.

Budgets:
Most people while they're going through a divorce or even after the divorce complain about not being able to pay their bills. It is important that you seek the help of a financial adviser to help you produce an accurate and complete budget that will help you after the divorce.

If you have a lawyer don't use them as a therapist, financial planner, or messenger:
Most divorce lawyers charge between $150 and $300 per hour. Lawyers are great for giving you legal advice. However, you should not use them to be your financial planners, emotional support, or career counselor. Most lawyers are not skilled in these areas. If you try to use them for these services you would end up more than likely paying them a lot more for these services, then you would if you hired people that were professionals in these fields.

Failing to develop and after divorce financial plan:
One thing, I think most people fail to realize is that it costs more money to operate two households than it does to operate one. Financial planning can help you transition from a married to a single lifestyle by prioritizing your financial goals. You should develop a realistic expectation and produce a good plan for the allocation of your financial resources.