1. Underestimating your Expenses
Income may be effected during a divorce, be sure to establish a new budget to help keep within your means. Many people want to maintain their current quality of life after divorce, be sure to estimate for future expenses when creating your new, personalized budget.
2. Assuming Equal Division is Fair
During a divorce, many couples split the property based on value. Keep in mind that current valuation may not pertain to the future. A rental property can actually bring in more money than it is valued, consider the future value of all assets as they are being divided.
3. Making All Financial Decisions at Once
Financial decisions should not be made in an emotional state of mind. Try to take your time and consult a professional when making major financial decisions. After your divorce is finalized, try to avoid making additional decisions based on finances for a while.
4. Misunderstanding Debt Liability
Typically, couples divide debts that were incurred together for each individual to pay off. The creditors do not care what your divorce settlement has stated, if your name is still on the debt, they can come after both parties for payment. A tip to avoid this situation is to pay off all joint debts incurred during the marriage before the divorce is finalized.
5. Thinking Parent with Custody Should Keep Home
When children are involved in a divorce, is often thought that the parent with full custody should keep the house. This is a nice thought to help keep a sense of normalcy for the kids, but this can create a financial strain for the one making the house payment alone.
6. Failing to Consider Long-Term Financial Security
Think about long-term financial situations that may arise due to your divorce. Whether it is child support, credit problems, or sending your kids to college one day, think about these factors when making decisions about your finances.
7. Forgetting to Update Beneficiaries
During a divorce, you should update your life insurance policy, estate plan, and any other accounts that may have your ex-spouse’s name on them. If something were to happen to you, the money would then go to the person who is listed as a beneficiary.
Many important decisions will need to be made during a divorce. Hiring a professional to advise you when making financial decisions during an emotional time can help ease your stress. The financial team at Bogetto & Associates can work with you to establish a financial plan and know what factors can help to avoid a financial nightmare during a divorce. Divorce is a major life change, both emotionally and financially, don’t let your financial stability go to the wayside during this difficult process.
Sources:
http://money.usnews.com/money/personal-finance/articles/2015/08/07/7-financial-steps-to-take-when-getting-a-divorce
http://www.divorcenet.com/states/arizona/sixteen_financial_mistakes#b
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Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
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Bogetto & Associates does not provide legal or tax advice. These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.
Bogetto & Associates does not provide legal or tax advice. These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.
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