1. Being Short-sighted
In the middle of a divorce spouses often pay attention to immediate problems rather than the long-term financial effects of decisions. For example, is you sell the family home and spend the cash on a vacation or a new car to make yourself feel better, you could end up without enough money to support yourself. Buy a smaller home or put funds in a retirement account instead.
2. Getting Even
The main goal of many couples during a divorce it to get even with their spouse for a miserable marriage. They can’t be civil and often fight in front of the children. They spend time and money litigating every issue in their divorce rather than being reasonable and settling the case. It’s better to opt for a collaborative divorce to save money and become better co-parents post-divorce.
3. Focusing on One Goal
There are many issues in a divorce, including division of assets, care of the children, child support, spousal maintenance, whether to keep the family home, and which assets to accept as part of a settlement. You must consider the tax implications of every asset. For example, alimony is taxable while child support it not, and money in retirement accounts will incur taxes when withdrawn while funds outside of retirement accounts won’t. Look at the entire settlement rather than focusing on one or two major goals to get the best outcome.
4. Keeping the Family Home
Change is difficult when you are in the middle of a divorce, so many people want to stay in the family home no matter what the cost. However, many divorced people find the cost of mortgage payments, utilities, and upkeep on a large home is just too much of a burden and they are forced to sell later. Make certain you can afford a large family home before you decide to keep it. Selling the home later can incur a large capital gain tax that could have been split when you were married to lower your tax burden.
5. Letting Your Emotions Rule
Everyone has strong feelings about money but emotions can be overwhelming during a divorce. During a divorce, when you are least able to make rational financial decisions, is when you are faced with important long-term economic choices. The best solution is to discuss the choices with your attorney, engage a financial professional, and talk to a trusted friend or family member for financial advice.
6. Not Understanding Finances
Many people let their spouse take care of finances and don’t understand how money works. This is a serious mistake because you can’t get a fair settlement unless you understand family finances. Make sure you get complete documentation of all family assets so you don’t miss a large item that is part of the community estate.
7. Not Knowing the Law
When your spouse first mentions divorce, take him or her seriously because it’s likely your spouse has already consulted a divorce attorney and knows the law. Before discussing a settlement or short-term arrangement, consult an attorney and discover the legal rules on alimony, child support, child custody, division of marital assets and how to prove some items are your separate property.
8. Legal Advice from Friends
Everyone has a friend who has gone through a divorce in the last few years and they are only too happy to share legal advice with you. You will hear stories about the great settlement they got and unsolicited advice about how to handle your divorce. While this advice might be helpful, remember your friends are not legal professionals and don’t know the law. Family law changes all the time and it complex, so you need to find a competent attorney to handle your case. And, you need to listen to him or her rather than your friends.
9. Using the Children
Never put the children in the middle of your divorce. It’s harmful to them and it may destroy your relationship after the divorce. Don’t ask your children for information about what your spouse is doing and don’t fight in front of them. Spend the time you have with your children concentrating on making sure they are okay and letting them know you love them.
10. Choosing the Wrong Attorney
Don’t engage the first attorney you find. Instead, do research, ask friends and attorneys you know for recommendations, interview two or three divorce attorneys, and choose one with good credentials and lots of family law experience who will check every detail of your case. Finally, make certain you feel comfortable with your attorney and trust him or her.