There is a definite trend online of posting or publishing lists of the “top things” associated with any given topic. We see them everywhere now. “The 8 Best Restaurants For Burgers In Atlanta” or “23 Things Men Do That Women Hate.” We have to admit that we love these kinds of lists and have a tendency to “click through” to get the details.
Recently, we were discussing whether there were common mistakes people in the midst of a life transition like a divorce were more apt to make. Taking a cue from our admitted guilty pleasure, we put together the following quick list of the 10 most common divorce money mistakes.
1. Underestimating your expenses.
- Think through the future, not just the past
2. Assuming your attorney/lawyer will handle everything.
- Attorneys/lawyers are legal experts. Even the best divorce attorneys are not trained to handle financial analysis.
3. Not correctly utilizing experts.
- Attorneys provide legal advice.
- Financial professionals provide budgeting, calculations, tax knowledge, and financial advice.
- Therapists provide emotional support.
- Utilize the appropriate professional for the most cost-effective result for you.
4. Not considering tax ramifications.
- Cost basis in assets can result in tax bills when sold.
- Proper tax treatment of alimony and/or child support.
- Know when you can deduct legal fees.
- There are many tax guidelines that can either hurt or help you. Know what they are and prepare accordingly.
5. Failing to communicate directly with your spouse.
- This can be emotionally painful, but important especially if children are involved. Using professionals to communicate can cost you additional fees.
6. Concealing important financial information/documents.
- It is natural to attempt to protect yourself and your assets during this time. However, you are required to provide all information to your spouse. When you attempt to hide things, it delays the process and adds cost. Records are subpoenaed and these things are found out in the end.
7. Not properly insuring alimony and child support.
- The beneficiary should be the owner of the policy and pay the premium. This prevents the policy from inadvertently being cancelled. The policy should be purchased prior to the divorce being finalized.
8. Assuming the wife should keep and remain in the house.
- It may be cost prohibitive for the wife to remain in the house going forward. Ensure that all future costs are considered before making this critical decision.
9. Not approaching mediation as a solution.
- A mediator can save you thousands of dollars and is less combative than legal proceedings. If you have utilized your team of experts, you should make every effort to mediate your settlement based on the advice of your experts.
10. Accepting an offer, just to get it over with.
- Although it is an incredibly emotional time. Utilize your team of experts to ensure that you are making the best decisions for now and the future. When the divorce is final, you want to feel as confident as possible in your financial future.