Top 10 Financial Mistakes You Cannot Afford to Make in Divorce

1. Failure to obtain professional input at the outset and consider settlement divorce options such as Mediation and Collaborative Divorce.  Often the most important decision is deciding on a process for divorce.  Options such as Mediation and Collaborative divorce often involve neutral specialists to help you make informed decisions, provide creative options that save you money, and help you avoid costly mistakes.  Mediation and Collaborative divorce can provide a more efficient use of your time and money.

2.  Discussing financial issues one at a time, rather than as part of the overall bigger picture.  You increase the potential for conflict, and you may overlook creative options.

3. Looking only at now, not the long term impact of financial settlement options.  Ignoring how your settlement may look 5 or 10 years from now can leave you with an unlivable situation.  Assets may seem equal in value at the time of divorce but may increase or decrease as time goes one.  Understanding how your assets and income work for you now and in the future is an important part of the overall settlement.

4.  Not taking into account the tax implications of support, maintenance and property division agreements. You need to understand the effect taxes have on your agreement. 

5.  Not getting full financial information on all assets, including retirement accounts/pension values and options for division and distribution as well as current and future tax effect. You don’t know you have a problem until it’s too late.  It’s important to get accurate information about your assets and income. 

6.  Failing to secure child support or spousal support with life insurance.  The death of a payee spouse can have a significant effect on a family. 

7.  Trying to retain a home you cannot afford.

8.  Not understanding potential liability for marital debts.

 9. Underestimating your future expenses, including allocation of children’s expenses.

10. Overlooking a Qualified Domestic Relations Order to divide retirement benefits, transferring titles, refinancing loans and other implementation steps.

**When you’re in the midst of a divorce, it is easy to get caught up in emotions and the desire to be done.  Poorly informed financial decisions may cause problems long into the future—don’t just get it done, get it done right!  Consult with a neutral professional at www.familymediationcenter.org to understand your options.

Grant Zielinski

Grant G. Zielinski is a certified divorce financial analyst (CDFA) at Divorce Financial Solutions, LLC in Milwaukee, Wisconsin. Grant works as a neutral financial specialist in collaborative and mediation cases to educate clients on financial matters such as tax issues, maintenance, child support, and property division incident to divorce.

 

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