4 Financial Mishaps to Avoid During Divorce
Nearly 45% of marriages in the United States end in divorce. Unfortunately, it’s easy to fall into financial trouble as you and your partner find an attorney who can help families navigate through the complexities of divorce. It doesn’t help that divorce comes with a lot of baggage, causing greater emotional stress and increasing financial burden among families. You’ll need to anticipate potential financial mishaps to save yourself from falling into debt or being forced to sacrifice assets you deem personal.
Overlooking Your Financial Assets
In an ideal scenario, your spouse should only take what intimately belongs to them. You, on the other hand, get to keep what is yours. You’re responsible for fighting for what is yours and standing your ground if you feel coerced by your partner. All financial accounts need to be thoroughly checked since the total sum of these saved earnings must be reported to the Internal Revenue Service. Along with your spouse, you must change your tax filing status and choose between single and head of household. The more transparent you are about your savings to the IRS, the more assets you get to keep. Debts are ideally cleared during or before the divorce process to further lessen the long-term burden on either spouse.
Not Considering Legal Separation
Most people choose to divorce to pursue their financial independence, so they don’t consider other options. Although many states recognize legal separation, there are a few that provide alternatives that don’t offer the same legal protections to spouses. However, legal separation is more affordable and provides relatively equal support for both parties. Couples get to keep their joint accounts and continue managing shared savings. You generally have no obligation to pay down debt your spouse acquires, which is strictly their responsibility. If you live in what is considered to be a community property state, however, debts incurred during the marriage are considered shared property. According to the Divorce law in Birmingham, the divorce case may start with filing a summons and complaint with the appropriate court. So, hiring a professional attorney to protect your laws is recommended.Â
Failing to Develop Your Own Career
It’s easy to feel powerless when you feel unable to control divorce the more it spirals into a complicated situation. A common tendency among women is their desire to emphasize family over career. However, they must continue to work or start finding work so that they’re better able to take care of themselves and their children in the future. Sometimes, wives feel controlled by former husbands who may have pressured them to stay home and tend the house. They may have felt the need to stop pursuing career-oriented goals. The decision to divorce provides more time for them to think of future goals to build upon their current finances and develop long-term savings, placing them into a 401k account typically provided by an employer.
Avoid Anything that Feels Too Good
Splurging into a shopping spree after the settlement ends may put you in greater debt than you initially anticipated. Whether you’re paying for alimony and child support, it’s important for both spouses involved to look at the numbers and make a decision based on that estimated value. You must protect your assets and look into your current insurance plan to consider broadening coverage if you feel more vulnerable to sudden liabilities.
Divorce is a difficult time for every family involved. However, it’s important for spouses to overcome the hurdles and financial mishaps that often stand in the way of future success. That’s why it’s beneficial to think about the financial consequences that could arise from mistakes that occur during the settlement negotiation process.
