Divorce is an emotional process. But when youâ€™re negotiating your divorce settlement, itâ€™s important to remain pragmatic and come to an agreement that is fair to you. Weâ€™ve provided some examples of common mistakes people make when going through a divorce. Here are six mistakes to avoid in a divorce to make it a much faster, less stressful process.
Not Choosing Mediation
Many people are unaware of the benefits of divorce mediation. If you and your spouse are willing and able to work together to reach a fair divorce settlement, mediation is an excellent option. You should be able to discuss all of the issues of your divorce, including child custody, alimony and property division. Mediation allows couples to save thousands of dollars in legal expenses and make decisions that work best for them and their family.
Using Divorce as Revenge
If mediation isnâ€™t a viable option, that doesnâ€™t mean you should hire a combative lawyer to try and punish your spouse. If you try to hurt your spouse through litigation, youâ€™ll end up having higher divorce costs. The higher the divorce costs, the less money and assets youâ€™ll have left for you and your family once itâ€™s all over. Try to leave the emotion out of your divorce and, instead, treat it like a business arrangement.
Failing to Factor in the I.R.S.
Itâ€™s important to prepare yourself for the tax payments that will need to be made during and after a divorce. Work with your spouse and a financial planner to minimize the total taxes youâ€™ll have to pay after the divorce is finalized. Determine the value of investments on an after-tax basis and decide from there how you will split your marital assets. Working with your spouse can help you avoid liabilities and come to a property division that is fair.
Failing to Factor in Social Security
If a couple is married for 10 or more years, the spouse making less income is entitled to derivative social security benefits on the higher earning spouseâ€™s record. These derivative benefits have no effect on the higher earning spouseâ€™s social security payments. So if youâ€™re thinking about divorcing your spouse of nine and a half years, consider the increased retirement options that result from waiting another six months.
Not Updating Estate Documents
Itâ€™s important to make the necessary changes to your estate documents after a divorce. Donâ€™t forget to change the beneficiaries on life insurance policies, IRAs and wills so that your estates are going to your children or new partner, not your ex-spouse.
Not Developing a Financial Plan for Post-Divorce
Divorcing couples need to realize that their settlement must last a significant amount of time. If you develop a financial plan for life after divorce, the transition from a married lifestyle to a single one can be a much smoother process. Prioritize realistic financial goals and create solid plans for the assignment and division of financial resources.
For more help and advice regarding your divorce, contact us today. Weâ€™re ready to assist you.