Financial Mistakes to Avoid While Divorcing
There are many things to consider when divorcing, from child custody to alimony determinations to property division. It is common for separating spouses to make wrong decisions in all these areas, and the consequences can return to haunt them later. Listed below are some common financial mistakes to avoid.
Rushing Things and Not Assessing Assets and Expenses
Even if you are convinced that your divorce must happen as soon as possible, it might make sense to consider mediation or arbitration first. This allows both parties more control over the final decisions and can save considerable money otherwise spent on a court case that could take much longer to settle.
Use this time to get a complete picture of your finances and your soon-to-be-ex-partner’s assets. Gather up previous tax returns, credit reports, bank, investment, and credit card statements, and loan documents. Take photos and have records of tangible assets like shared vehicles, expensive furniture, and shared property like your marital home. Remember to estimate your current expenses and figure out what the future ones will be as well.
Not Closing Joint Accounts
It is crucial to close out all jointly-held accounts that have your and your spouse’s names on them. Remember that new accounts cannot be hidden from your spouse.
Forgetting About Tax Implications
This is important because selling off assets can mean an inflow of taxable income. Liquidating an IRA or 401(k) can result in significant tax penalties. It can also put you in a higher tax bracket. Tax laws have also changed since the Tax Cuts Jobs Act of 2017. Child support payments are never deductible or taxable.
Consult with your divorce lawyer before selling any valuable assets.
Recognizing That Debts Must Be Paid
Married couples who accumulate debt like car loans must still pay those off during and after divorce proceedings. You might be responsible for paying an equitable share of monies owed, and if this is neglected, your credit rating could plummet.
Accumulating More Debt
It can be hard to give up a family home, but any assets that are no longer affordable should be reconsidered. Some ex-spouses can buy out their houses, but this might not work.
Our Marlton Divorce Lawyers at Goldstein & Mignogna, P.A. Can Skillfully Guide You During Your Divorce
Navigating financial matters during the divorce process can be overwhelming. Speak with our Marlton divorce lawyers at Goldstein & Mignogna, P.A. for legal help. To schedule a consultation, call 856-890-9400 or complete our online form. Located in Marlton, New Jersey, we serve clients in South Jersey, including Burlington County, Camden County, and Gloucester County.