Uncoupling is hard to do, and much more so when it involves dividing a household or time with your children. In the midst of emotional upheaval, dealing with the financial aspects of your separation can be overwhelming. Since dividing assets is a major source of conflict for any couple, this is often when the best intentions for an amicable split go flying out the window. But when the D is inevitable you can have affordable divorce emotionally and financially
COMMON DIVORCE MISTAKES PEOPLE MAKE WHILE PREPARING TO ‘UNCOUPLE’:
- Focusing on one issue – Instead beaming in on one single thing, such as keeping the home at all costs, try to be a big picture person.
- Failing to figure out what it will really cost you to live on after divorce – Don’t be short sighted: what appears to be an equitable division of property at a ‘break up’ time can turn out to be grossly inequitable due to tax consequences when assets are liquidated in the future to meet cash flow needs.
- Making financial decisions based on emotions – Make sure that your desire to make it go away does not cause you to “just” settle. If you can’t think clearly about your finances, engage the help of a Certified Divorce Financial Analyst™ (CDFA).
- Not considering the tax ramifications – A dollar of cash or home equity is NOT equal to a dollar of retirement assets. Use caution when trading assets with differing tax characteristics
- Assuming that a 50 – 50 split is the right way to go – What appears to be a win-win situation in the short term could actually be a lose-lose situation for all concerned down the road.
When break up is inevitable, it is important to do your financial homework and seek a help from a qualified financial professional and a mediator to help you avoid the financial pitfalls so common when emotions affect decision-making.
You can find detailed information on property division and divorce finances in my book The Bedroom Elephant: A Guide to Successful Divorce at http://www.amazon.com/The-Bedroom-Elephant-Successful-Divorce-ebook/dp/B00H4E61BM