Divorce, for most people, is emotionally draining. Despite the stress, you will be expected to analyze your finances very carefully to ensure that your settlement agreement is fair and equitable. With “divorce brain”, that’s easier said than done! Even if you feel like you are clear-headed, there are a few common money mistakes to look out for when getting divorced.
1. Underestimating post-divorce expenses – A Financial Affidavit reflects your expenses AFTER the divorce. It is critical that you are realistic and don’t omit anything. This information will be used to determine if spousal maintenance is necessary or not. You must be sure to include everything from your health care deductibles to anticipated home repair charges for the roof you need to replace next year. If you underestimate your expenses by $300 per month, that’s $3600 per year. Where’s that extra money going to come from? When you are the main breadwinner this mistake could lead you to agree to pay maintenance that you ultimately can’t afford. A Certified Divorce Financial Analyst® will help you review your Affidavit for errors and make sure that you don’t leave anything out.
2. Believing that your attorney will handle everything – Your attorney is an expert in the law, not finances. The attorney’s job is to get you to fill out your financial affidavit and take your word for it that it is correct. A good attorney will check over it looking for any glaring errors but that’s about it. The most commonly missvalued asset is a pension. And sometimes, the pension is the most valuable asset in a marriage. Often attorneys accept a present value statement from a pension as the correct value to include as marital property. It’s not. A CDFA® can value it properly and make sure that tax ramifications are considered as well.
3. Letting attorneys do the talking for you – The more you and your spouse can work out by yourselves, the more money you’ll save. If you have your attorney relay information to the other spouse’s attorney because you can’t stand to be in the same room with one another, you’re racking up bills upwards of $500 an hour because you refuse to talk. That’s ridiculous. Get over any anger and work it out.
4. Letting your emotions make your decisions – So many people going through divorce just want to “get it over with.” This kind of thinking is why divorce so often leads to bankruptcy! A 50/50 split of assets is almost NEVER a truly equitable settlement. So, put the emotions aside, talk to your spouse. Take your time and make sure you thoroughly understand what your future will look like after your divorce and be sure to hire the right experts to help you.
If you have any questions, please give me a call at 702-835-6960