Divorce is hard, particularly when you are dealing with the complexities of property division. While it is tempting to want to get things completed as soon as possible, it is in your best interests to slow down and carefully review your finances.
Making financial decisions without careful consideration can not only deprive you of assets, but also can be detrimental to your personal finances. Consult with your financial advisor, accountant and divorce attorney to make sure you get your fair share of the marital property.
The following are six common mistakes that can negatively impact your assets during the divorce process:
- Overlooking assets - Missing or unknown assets can't be included in property division, so it is vital to thoroughly document everything. This includes current assets like bank accounts and real estate and future interests from pensions, businesses or stock options. Hiring an investigator may also be helpful for uncovering hidden assets.
- Ignoring tax basis - In order to obtain a fair divorce settlement, it is important to consider taxes. This is particularly true when comparing taxable and non-taxable assets. Be sure to use the value of assets after applicable taxes are applied.
- Keeping accounts connected - Keeping joint accounts open and keeping each other as beneficiaries can cause potential liabilities in a divorce. Make efforts to open separate bank accounts as well as close joint accounts and credit cards. When possible, change beneficiaries on life insurance policies, annuity contracts, retirement accounts and other assets.
- Dipping into retirement accounts - Although tempting, it is best to avoid withdrawing from your retirement accounts, whether to pay for the divorce or pay off joint debt. These assets should be kept intact and part of the divorce settlement.
- Getting emotional - When emotions all involved, it is easy to get sentimental and overvalue certain assets. Get professional appraisals for real estate, businesses and other valuables.
- Misunderstanding jurisdiction - Be sure you understand the rules in Texas, or the state where you are divorcing, regarding marital property and alimony. Laws vary from state to state.