Three Of The Most Common Financial Mistakes Made When Filing For Divorce
A divorce can be a very stressful and emotional time, but it's a time when people are making decisions that will have long-lasting financial implications. During a time like this, it would be easy to make a decision based on emotion, without taking time to really think about the long-term results. Here's a look at three of the most common financial mistakes people make when filing for divorce and what you can do to avoid them.
Assuming That Fair Always Means Equal
In divorce proceedings, people almost always assume that equal distribution means fair distribution. But remember that an asset's value isn't necessarily tied to its current value. Assets that generate income, like rental property for example, may be worth far more than their market value over time. An equal distribution now could be incredibly disproportionate 10 years from now. Be sure to take into account not only current value, but potential future value.
Not Securing Alimony or Child Support With Insurance
Child support and alimony can be tricky situations. Two parties may agree on spousal support, but the ability to collect that support is only as good as the other party's ability (or willingness) to pay it. Aside from the difficulty of getting support from a spouse that simply doesn't want to pay it, what happens if that spouse passes away? During divorce proceedings, it's often a good idea to request that child support or alimony be backed up by disability or life insurance in the event of that spouse's death.
Underestimating Liability for Unsecured Debt
In most cases, unsecured debt means credit cards. And if debt was incurred during a marriage, it's the liability of both parties after divorce, no matter which spouse racked up the debt during marriage. But even if the debt is a "shared" responsibility, the credit card companies can (and will) come after you if your spouse isn't paying. It's much easier said than done obviously, but the best practice for credit cards in a divorce is to pay them off completely before the proceedings are final.
Divorce isn't an easy situation, but it can be made drastically worse by making poor financial decisions that could potentially have an impact on your finances for years to come. Even though it can be tough to think clearly at this time, slow down and make sure you're making good choices for your future. This helps ensure that you'll be able to move on from your divorce as quickly as possible.
For more information on how to avoid financial mistakes during a divorce, contact a professional family law attorney.