The Five Worst Financial Outcomes of a Divorce
By Duncan E. White, Owner
Inkpointe Divorce Solutions, LLC
Divorce is a challenging and emotional process, and it can also have a significant impact on your financial stability. When couples go through a divorce, they must divide their assets and debts, and this can lead to some serious financial complications. Here are five financial outcomes you should try your best to avoid during a divorce:
Not understanding your financial situation.
One of the most significant financial mistakes you can make during a divorce is not having a clear understanding of your finances. Before you start the divorce process, it is crucial to gather all the financial documents that you will need, including bank statements, tax returns, and investment accounts. If you don’t have a clear understanding of your finances, you may end up with an unfair settlement.
Fighting over assets that aren’t worth it.
During a divorce, couples often fight over assets that aren’t worth the cost of the legal battle. For example, if you and your spouse are fighting over a piece of property that has a high mortgage and is underwater, it may not be worth the legal fees to keep it. It’s essential to consider the long-term cost of any legal battles and make sure you are fighting for assets that are worth the effort.
Failing to consider tax implications.
Many financial decisions during a divorce have tax implications. For example, if you receive alimony, it’s essential to understand how it will affect your taxes. Failing to consider the tax implications of your financial decisions can lead to some serious financial consequences.
Not considering the long-term financial impact.
When you’re going through the divorce process, it’s easy to focus on the short-term financial impact. However, it’s crucial to consider the long-term financial impact of any settlement. For example, if you’re fighting for the family home, you may not be considering the long-term cost of maintaining the property. It’s essential to consider the long-term financial impact of any decision you make.
Going into debt to finance the divorce.
Divorce can be expensive, and many people go into debt to finance the legal fees. However, going into debt to finance a divorce can have serious long-term financial consequences. It’s essential to have a plan in place to pay for the legal fees, whether it’s through savings or a loan. Going into debt to finance a divorce can lead to even more financial stress.
Going through a divorce is never easy, and it can have a significant impact on your financial stability. To avoid these financial mistakes, it’s essential to have a clear understanding of your finances. Consider working with a Certified Divorce Financial Analyst® to be sure you know what you are getting yourself into during the divorce settlement negotiations. By being proactive and informed, you can minimize the financial impact of a divorce and start rebuilding your financial stability.
Duncan E. White is a Certified Divorce Financial Analyst (CDFA®) and has been a licensed financial advisor since 2010. He leads a Second Saturday Divorce Workshop each month for the benefit of those seeking information about the divorce process.
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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. LPL Financial and Inkpointe Divorce Solutions do not offer tax, legal or mortgage lending services or advice.