Once the decision to divorce has been made, parties often start to wonder how they will fare financially. After all, money is one of the most common reasons for contention in divorce. Contention is not the only issue that may impact a divorce settlement though. In fact, there are many potential pitfalls that can have a financial impact on one or both divorcing parties. Learn what they are and how you can avoid them by examining the following financial mistakes commonly made in a divorce.
Underestimating the Potential Impact
Divorce is a lot like a business transaction, and like all business transactions, it is inherently complex. Factors that determine the division of debts and assets are applied differently from one case to the next, based on the couple's particular situation, and that can leave one party at risk for a significant financial depletion. In fact, one study found that baby boomers, who are currently divorcing at an unprecedented rate, saw a 77 percent reduction in wealth after divorce. Add in the potential for asset depletion, asset hiding, and revengeful spending and it becomes clear just how crucial it is that one fully understands the financial risks and implications of divorce - so underestimate it at your own risk.
Allowing Emotions to Dictate Your Decisions
Divorce is an emotional time, full of grief, disappointment, loss, heartache, and possibly even feelings of betrayal. Unfortunately, it is all too easy to let these emotions high-jack or even stall negotiations with your spouse. Not only does this cost you more time, it can also cost you more money. Keep this from happening to you by reminding yourself that the legal process is a business transaction. The pain and loss are meant to be dealt with personally, outside of the courtroom, so that you can move forward with your new life.
Using or Improperly Dividing a Retirement Account
Retirement accounts are often one of the more valuable assets in a divorce, which is why they must be handled with such great care. Using the money to fund a divorce, pay off debts before a divorce, or improperly dividing it can have negative tax implications. Alternatively, such actions may place both parties at financial risk during their retirement. Granted, the greatest impact is likely to be experienced by those who are nearest to retirement age, but even young divorcing couples may ultimately feel the effects of an improperly handled or divided retirement account, once they reach their golden years.
Contact Our DuPage County Divorce Lawyers
In divorce, everything matters – including the attorney that you choose. If you are looking for a legal representative that can listen, explain your options with empathy and compassion, guide you through the process, and advocate for your best interests at every turn, Mevorah Law Offices LLC is the firm to call. Backed by more than 200 years of combined legal experience, our DuPage County divorce lawyers will strive for the most favorable outcome in your divorce, regardless of the situation. Get started by scheduling a free initial consultation. Call 630-932-9100 today.
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