Common Financial Mistakes During Divorce
Going through a divorce can be a very emotionally charged time. Unfortunately, when emotions are so high, it is difficult to consider the long term ramifications of some of the financial decisions made in the process. Prioritizing your finances is crucial during the dissolution of a marriage. When the process ends and the dust settles, you do not want to discover that your financial future may be in jeopardy. Below are some of the common monetary mistakes made throughout the pendency of a divorce action.
Common Financial Mistakes
- Refusing to realistically evaluate what to do with the marital residence. Oftentimes both parties want the marital residence, especially when they may be awarded joint physical custody of the children. The children are comfortable in that house, and moving is never fun. But keeping the family home may be economically difficult. The expenses that come along with that home may be burdensome, including mortgage, insurance, maintenance, and repairs. No longer will two incomes be available to pay those expenses.
- Not knowing the full extent of your debt. It is not uncommon for one spouse to be more actively involved with handling the money during the marriage. Being aware of all the debt is necessarily in order to create a solid financial plan for the future.
- Confusion about retirement accounts. Depending on the ages of the parties, if retirement plans are not in pay status, they may be overlooked. Qualified Domestic Relations Orders allow for one spouse to receive a portion of the other spouse’s retirement benefits that were accumulated during the marriage through participation in an employer-sponsored retirement plan.
- Failing to consider tax consequences. When it comes to taxes, things change when you get divorced. Filing status should be considered. Parties may allocate the claiming of the children as dependents. Tax brackets may change. Are you withdrawing money from a retirement account? You must consider the tax consequences of such an action.
- Emotional attachment to assets. Keeping items because you are emotionally attached to them does not take into account the future financial harm that continuing to pay for them may have on you and your children. Along these same lines, it is important not to take on the expense of an asset simply because you do not want your ex-spouse to receive that asset in the divorce. At the time, it may make you feel good, but when the expenses come due after the divorce is over, you may struggle to figure out how to make the payments.
- Reluctance to retain experts. Depending on the complexity of the marital estate, retaining experts may be imperative. Although that may concern you initially, the benefit may outweigh the expense. Talk to your lawyer about forensic accountants, appraisers and similar experts.
- Unwillingness to consider compromise. The more litigious the case becomes, the more financial harm it may inflict on the parties.
Contact a Pittsburgh Divorce Attorney Today
If you are thinking about getting a divorce or have already filed, now is the time to hire an experienced attorney to help you through this complicated legal process. Our skilled Pittsburgh divorce attorneys will give you step-by-step guidance to make sure you and your children are financially protected. Contact us today at Bunde & Roberts, P.C. for help.