Financial Mistakes to Avoid During a Divorce
Divorce will take a toll on your emotions yet it does not have to devastate your finances. If you are worried you will lose money or not be provided with sufficient financial support after your divorce, it is imperative you hire a savvy matrimonial attorney. Aside from obtaining legal representation, you can also do your part to preserve your finances by avoiding the common financial pitfalls divorcees experience during and after their separation.
Division of Property
The division of property is a major factor in most divorces. Arizona is a community property state, meaning a married couple’s property is divvied up into marital property and separate property. Marital property accounts for assets and property that are either earned or obtained by either of the spouses throughout the marriage. Separate property is property obtained prior to the marriage. This property belongs to the party that acquired it before marrying. If either spouse receives specific gifts or inheritances while married, those assets can be considered separate property as opposed to community property. In fact, a spouse’s actions taken in respect to separate property has to potential to make it marital property.
There are some situations in which couples cannot agree on the division of their assets. The court typically attempts to strive for a 50-50 split if the separating couple cannot reach an agreement on their own. Though this result will likely be perceived as unfair by one of the parties, the bottom line is a decision must be made in a reasonable amount of time so the court takes the initiative.
Do not let Your Anger and Fear Cause Financial Mistakes
Divorces are inherently emotional conflicts. If you are angry, fearful or emotional in any other way, you might make significant financial mistakes in the heat of the moment. This is precisely why you should obtain legal advice from a savvy divorce attorney before making any financial decisions or taking any action in regard to your finances. A skilled matrimonial attorney will make it easier to overcome the challenges of divorce, preserve your finances and help you make a seamless transition to the next chapter of life.
Click here to find out 8 financial mistakes to avoid in your divorce settlement.
Avoid “Retail Therapy” to Numb the Pain of Divorce
Divorcees make the common mistake of spending on high-end luxury items to minimize the pain stemming from divorce. There is no buying your way out of this unfortunate situation. Do not assume the purchase of a new house, vehicle or wardrobe will make it easier to transition away from your marriage. Do not lose sight of the fact that you are now single. This is the time to watch your spending as opposed to spending freely. Focus on improving your spirit and well-being during this difficult time rather than attempting to buy happiness. Improve yourself and you will not feel as though purchasing new items will fill the void left by divorce.
Do not Fight to Keep a House You Cannot Afford
If you have to pay alimony or child support, it might not be financially possible to keep your home. Crunch the numbers immediately after your divorce so you know exactly where you stand financially. If you cannot afford to keep your house, do not engage in a prolonged fight. Recognize the fact that you will need to transition to a smaller home or an apartment, make the move and look forward to the future.
Additional Considerations of Note for Arizona Divorcees
Some divorcees cash out their retirement plans and/or investments upon retirement. Cashing in on such plans and investments is almost always a mistake. You will likely end up with a massive tax bill and/or IRS penalties for these rushed financial decisions. It is also a mistake to quit your job in an attempt to avoid alimony payments. Even if you think the court’s decision is unfair, you should continue to work and abide by the court’s orders down to the very last detail.
Click here to find out are Arizona divorce records available to the public?