Divorce ranks very high on the list of most stressful life events. And while it’s natural to feel grief about the dissolution of a marriage, spouses also need to consider more practical implications, including the effect on their bank accounts.
From divvying up assets to claiming your children on your taxes, the path from wedding bliss to peaceful divorce can be a long one.
Don’t Let Emotions Dictate Your Financial Decisions
People often want to take out their hurt feelings on their exes. However, it’s important that you don’t let emotions interfere with your finances or the business at hand. In the long run, being spiteful could hurt you — right in the wallet.
Everything Is Fair Game
Don’t make the mistake of thinking assets in your name can’t be claimed by your spouse in a divorce.
Practically everything is divisible, including frequent flyer air miles or royalties from a book you wrote. Because the same holds true for liabilities, couples should consider all factors when doing their financial planning, including what is or isn’t a liquid asset.
Make Big Purchases Before Filing
Have a big purchase in mind, such as a new car? Vermont issues an automatic financial restraining order prohibiting people from making big purchases or liquidating assets after the divorce is filed, absent a court order or an agreement.
Keep Track of Your Spouse’s Spending
If you’re thinking of filing for divorce or legal separation, take a look at your spouse’s financial situation. You should keep tabs on whether your spouse is taking out new lines of credit.
Gather Key Evidence Before Filing
If you’re thinking of filing for divorce, it can be tough not to walk out the door immediately when your spouse pushes your buttons. A tip perfect for this phase in your financial life: Take time to collect evidence before a split. Along with taking pictures of assets, make copies of account statements and jot down any important numbers. Preparation is key if you hope to come out ahead in court.
Get Property Appraised Before You Part Ways
When it comes to divorce, almost all property is fair game. Couples can’t hope to get their fair share if they don’t know the value of their assets, and whether those assets can increase their individual net worth.
Don’t Hide Assets
Trying to deceive your spouse about money by hiding or concealing assets might also mean breaking the law. If what you’re hiding is discovered, you’ll lose credibility in court. There could also be stiff penalties, including monetary sanctions. To protect yourself and your property during a divorce, declare all assets upfront.
Familiarize Yourself With Your Finances Before You Split
Often, one person in a household manages the finances. But such an arrangement can create a power imbalance when it comes time to negotiate settlements. Seek professional help to guide you in making more informed decisions about finances before filing for divorce. Doing this will help you come out swinging when you get your day in court. Take everything into account, even things that might not occur to you, like Social Security benefits.
Consider Mediating Your Divorce
It’s no secret that divorce can be expensive. In fact, the average cost of legal fees in a divorce is between $10,000 and $15,000. One way to cut down on these expenses is to use a mediator.
A mediator doesn’t work on behalf of any one party, just facilitates agreements. If you want to keep your divorce details behind closed doors while cutting costs, a mediator might be the best bet for both you and your bank account.
Know What Your Biggest Asset Is
Many people mistakenly believe their house is their biggest asset — when it’s actually a retirement or pension account. Even if your retirement account is less than robust now, the court will likely consider its future value when dividing assets.
Compromise Could Help You
You win some, you lose some, right? Unfortunately, divorcing spouses often refrain from compromising out of spite.
While you might be tempted to fight every battle that comes your way, agreeing to compromises could save you a lot of headaches and money on legal fees when going through a divorce. As an added bonus, your decision to compromise could encourage your spouse to do the same. Before marrying, think about securing a prenuptial agreement.
Avoid Underestimating Living Expenses
You need to know what your spouse earns monthly, as well as where the money goes. When considering the cost of future living expenses, it’s important to take into account the effect of inflation.
One recommendation is to keep receipts so you have a good idea of what everything actually costs. Doing this will help you maintain quality of life after a divorce.
Don’t Keep or Sell Your Home on a Whim
Whether you have an emotional attachment to your family home or are just being vindictive toward your former spouse, be sure you’re thinking wisely about your decisions with regard to shared property, and what you’re going to do with your property if you need to move into a smaller space. You don’t want to discover later that you gave up other assets just to keep a home in which you can’t afford to live.
Know What You Value
When contemplating divorce, it’s important to consider what assets you value most and be prepared to let some things go.
A major mistake in divorce that everyone can get trapped into is spending hundreds or thousands of dollars fighting for something that you don’t even want. Take your time so you can make the most rational and intelligent decisions, and to truly survive this new financial challenge.
Disclaimer: Information provided on this site is NOT formal legal advice. It is generic legal information. Under no circumstances should the information on this site be relied upon when deciding the proper course of a legal action. Always get a formal case evaluation from a licensed attorney if you think you might have a personal injury lawsuit.