Common Financial Pitfalls of Divorce - Part 4

When divorce occurs, it can leave even the most prepared spouse reeling. For a spouse who is financially unaware or unprepared, the emotional and monetary turmoil can be even greater.

In this fourth part of our four-part series (Part One, Part Two, Part Three), we share with you our final thoughts on the most common financial pitfalls facing divorcing spouses.

Allowing Panic To Take Control

The divorce process seemingly brings with it a crisis around every corner. Whether it is an unexpected bill, escalating legal fees or a stubborn spouse who challenges every decision, there is no shortage of things that will keep a divorcing person up at night. Countless hours are spent tossing and turning, worrying about all the “what ifs.” Instead of letting these worries become all-consuming – and making poor financial decisions based on fear rather than logic – it is important to find some means of stress relief during the divorce. Whether it is yoga, kickboxing or simply writing down your fears and revisiting them in the clear light of day, allowing panic to take control during a divorce will only have a negative long-term impact.

Ignoring Tax Consequences

A major component of any divorce is dividing up the marital assets. Real estate, retirement accounts and investments each come with their own set of pros and cons, especially when it comes to liquidity and taxes. For example, it may be tempting to want the marital home, but that may not be the best financial decision. Maintenance and upkeep are often underestimated, and it can quickly become an albatross rather than an abode. Likewise, accepting a retirement account instead of cash could tie up assets for decades or more. It is important to consult with an accounting and tax professional to ensure that the full implications – both short- and long-term – of any final property division are understood.

Failing To Get Solid Professional Advice

While it may be tempting to save a few (thousand) dollars by trying to go it alone in a divorce, this is usually a very unsound financial decision in the long run. Divorce can be a very complicated process, and without sufficient legal and financial knowledge rights can be unwittingly given up. Hire the best attorney you can afford – not the cheapest. The old adage, you get what you pay for is usually true. Likewise, consider a forensic accountant if you believe assets are being hidden. A divorce financial professional can also be one of the best investments to secure a solid financial future.

Click here to read the original post or learn more about how a Divorce Transitional Support Advisor can help divorce attorneys and clients ensure a brighter financial future for people getting divorced.