August 17, 2020
There’s a lot of different things to think about, decide, and process during a divorce, including finances. Unfortunately, during a divorce, people can make financial mistakes. During the divorce process, you will face many decisions that can affect your finances and financial security.
For this article, we wanted to share common financial mistakes that people make during a divorce.
- Ignoring/underestimating expenses – Take time to write down all your expenses and income to create a monthly budget. You may also include future expenses, inflation, and other costs. You want to come up with numbers that will help you maintain your current quality of life.
- Wanting to keep the home – Keeping the home, especially if children are involved, can get very emotional. You may want to keep the comfort of your home and avoid the headache and expenses of moving but living in the house may not be financially smart for you. If you can’t afford it, you will have to give up a lot of other things in your life in order to keep it. Before deciding who keeps the home or if it needs to be sold, make sure you can cover the mortgage, taxes, maintenance, etc.
- If you are awarded the majority of the time sharing of the children the Court may award you and the children the exclusive use and possession of the home and its contents until the children reach age majority (18 years old/Highschool Graduate) or you decide to move out of the home. This does not affect ownership of the home, since your former spouse will retain his/her share of ownership of the home.
- Equal division isn’t necessarily the fairest way to divide property – You want to compare apples to apples when you trader assets in a divorce. Look at taxes, prevent value, and transaction costs. An asset’s value may be worth more than its market value if it can generate income or an asset may be worth more after taxes.
- Thinking about financial issues one at a time – You want to look at the whole picture of your finances to understand how each financial decision you make may affect another decision. This will help you to determine how and when to divide assets. If you look at all your income or assets separately, you aren’t considering the interaction of losses, gains, taxes, inflation, and more.
- Not securing alimony or child support payments with insurance – You want to request that your spouse gets life insurance policies (or modify existing policies) to ensure your alimony and child support will continue even if your spouse becomes disabled or dies. If your spouse stops paying voluntarily, you will be able to go back to court and ask for an order to receive payments.
- Not realizing you’re liable for unsecured debt – When debt occurs in a marriage, it is a shared liability. During the divorce, you will divide responsibility for the debts. You may be still liable for a debt your spouse is supposed to pay and doesn’t. Your best bet is to pay off all debts before the divorce is final.
- Not evaluating a defined benefit pension plan correctly – Even though you have to wait until retirement to receive payments, the defined benefit plan (DBP) has value today and your spouse is entitled to a share of that value. A financial expert can calculate the present value of the DBP.
- Not considering your long-term financial security – Don’t just focus on splitting assets and getting support now, try to envision life in five, 10, or even 20 years from now and what you will need.
Need a Divorce Lawyer in Jacksonville, FL?
Divorce is complicated enough but dealing with finances can make it far more complicated. We advise our clients to hire financial planners to review any proposed settlements and advise you on long-term financial decisions and consequences.
If you are considering divorce, talk to an experienced family law attorney.
William J. Dorsey is a divorce attorney and understands each divorce case is unique. Give us a call and we can help you through the entire divorced process.
As a Jacksonville divorce law firm, with more than 45 years of experience in the state of Florida, Dorsey Law Firm knows Florida divorce law and how to apply it to get their clients the best possible outcome. Dorsey Law Firm guides their clients through the entire process.
If you are considering divorce, our team would be happy to help you learn more about the divorce process in Florida. By hiring a divorce attorney, you’re laying the groundwork for a better result, especially if your divorce is complicated.
William J. Dorsey founded the Dorsey Law Firm in 1975 and has practiced family law and tried numerous trials throughout Florida in state and federal courts.
To request your in-person consultation at The Dorsey Law Firm’s Jacksonville Law Office or if you have any questions, call 904-346-3883 or click our Jacksonville Divorce Attorney page for more information.