The biggest financial mistakes to avoid when filing for a divorce
You enjoyed many happy and memorable years with your spouse and piled up a truckload of memories, as well as a nice collection of debts and assets. Unfortunately the forever and ever part of the relationship didn’t come true and the two of you are splitting up. Breakups carry with them a great deal of emotional trauma and now you have the additional stress of resolving often-complicated financial details.
Michigan courts will not grant a divorce until a fair division of debt and property is reached. Instead of putting your fate in the court’s hands, it is far wiser to remain fully aware of your marital financial state. Making a critical mistake at this point could have significantly negative effects on your life for years.
Come out of the dark
Let’s say your spouse is a numbers wizard and you both agreed a long time ago that they would handle the financial minutia. You have a general idea of the financial state of things but in the grand scheme, your spouse has a tremendous advantage when it comes to time to settle in court.
If you both get along and can work together amicably, that’s great. However, if you suspect a divorce is imminent or your spouse may leverage his or her financial knowledge to their advantage, it’s time for you to get up to speed and it’s all about information.
Get as much information as possible ahead of time. Make copies of account statements relating to retirement, banking, tax returns, credit cards, and all the rest. If you suspect liquidation or retitle of assets, you need to alert the asset holder and be aware of any cash outflow.
In all cases, your best strategy is to seek solid financial advice from a trusted professional to avoid some of the most common and detrimental financial mistakes during divorce.
Unaware of expenses
You most likely know exactly how much money you make every year. But do you know where it all goes? If you don’t or if you underestimate yearly living expenses, start a practice of recording all expenses and develop a realistic budget.
Equal property division is not always fair division
The heirloom credenza in your living room is amazing but that doesn’t mean its value matches market value. On the other hand, income-generating assets such as rental property might be worth more than market value. Pay close attention to present and future value.
You both share unsecured debt
Regardless of who heaped up the huge credit card debt, if it happened during your marriage it is a shared liability. The best strategy? Pay off debts before the divorce.
Don’t single out financial details
Finances are never as simple as black and white and should never be reviewed as separate entities. Look at the overall financial picture to fully understand the best plan for division.
Don’t focus on rushing the process simply to split assets and move on. Look 10 or 20 years down the road to ensure a strong financial future.
More questions on smart financial decisions in divorce cases? Contact Gucciardo Law Firm at (248) 723-5190 or gucciardofamilylaw.com.
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