Going through a divorce is difficult enough on a purely emotional level—it’s unfortunate that so many important logistical and financial decisions must be made at such a difficult time. But that is the reality of the situation, and the result, unfortunately, is that many individuals make serious mistakes that impact them financially for years and decades to come. Below are four of the most common to watch out for.
1) Depending on inaccurate financial information. In order for both parties to achieve a fair settlement, accurate and complete information must be used. Unfortunately, if either spouse chooses to be deceptive in order to better their own situation, it can be very difficult to arrive at a fair settlement. For this reason, we highly recommend partnering with a forensic accountant who can identify and detect instances of fraud and dishonesty.
2) Failure to think through the repercussions on pensions and other retirement benefits. It is critical to examine the impact that your divorce will have on your sources of retirement income. For instance, are you continuing to pay a spousal survivor benefit premium? Do you have the option to stop doing so, should you choose to? Options vary widely from pension plan to pension plan, so do your research.
3) Not following up. This process doesn’t end the moment the divorce is final. There are a number of important details which must be handled—things like updating your estate plan, closing or removing your spouse from joint bank accounts, updating life insurance policies, closing joint credit cards, etc. Feel free to contact us if you’d like to learn more about the process of cleaning up a messy financial picture.
4) Failure to think through tax ramifications. You typically have the option of filing taxes individually or jointly during the year of your divorce. It is important to evaluate both options to determine which is most favorable. If you are planning to sell your home, it may be better for tax purposes to finalize the transaction before completing the divorce. Contact us today to learn more!
Going through a divorce is difficult on many levels, and unfortunately mistakes that are made can have a lasting impact. Contact us today if you’d like help during this difficult time.