THE REPRESENTATION YOU NEED IN ORDER TO PROTECT YOUR FAMILY
Financial Mistakes to Avoid When Filing for Divorce
Posted in Divorce on March 15, 2021
When preparing for a divorce in Fort Collins, Colorado, you can do certain things to reduce your financial risk and have greater control over the outcome of your case. It is critical to avoid common mistakes that lead to financial issues for a spouse post-divorce. Work closely with a divorce lawyer for assistance with the financial side of a divorce.
Filing for Divorce Too Late
Depending on your situation, when you file for divorce could make a substantial difference in your financial outcome. You do not want to wait too long to file for divorce, as this could lead to more of your assets belonging to your spouse. Any money, property or assets you acquire while still married (and not separated) will become marital property that is owned by both of you and subject to division during your divorce.
Filing for Divorce Too Early
You also do not want to file for divorce if you are only months away from being eligible for a certain type of financial award. In Colorado, the length of a marriage affects the amount awarded in alimony. You will also qualify for Social Security benefits from the higher-earning spouse if you have been married for 10 years or longer. Of course, if you are in an abusive relationship, you should not wait. Do your research and work with a divorce attorney to file at the right time for you.
Not Understanding the State of Your Marital Assets
It is important to know as much as possible about you and your spouse’s income and assets before divorce. Gather copies of financial documents, including bank account statements, tax returns, credit card statements and pay stubs. If you are not the person who handles marital assets, hire an attorney who can gather this information for you. Otherwise, your spouse will have an advantage during settlement negotiations.
Being Emotionally Attached to Assets During Negotiations
Do not let your emotions control your divorce settlement. Going into negotiations with fear, anger or an emotional attachment to any assets could negatively affect your case. If you are emotionally attached to the family home, for example, you might fight to keep it – even if you cannot afford the mortgage and bills post-divorce. Go into negotiations with a cool head to avoid making detrimental financial mistakes.
Divorce mediation allows you to remain in control of your finances after a divorce. During mediation, you and your spouse decide the terms of your divorce agreement. If you skip mediation and go straight to a divorce trial, however, your fate will be in the hands of a judge. Being willing to negotiate, compromise and settle could help you financially.
Ignoring the Tax Implications of a Divorce Settlement
The amount of taxes you and your spouse must pay during separation and divorce can be hefty. Both you and your spouse will be liable for taxes owed on joint returns. Furthermore, you may face taxation on marital assets you receive via a divorce settlement. Working with a tax professional can help you save money in taxes before you agree to a settlement.
Having a Plan for Long-Term Financial Security
It is common to only think about the immediate future during a divorce case. Do not be so preoccupied with your current finances and assets, however, that you ignore your long-term financial security. Arrange a divorce settlement not only for your immediate future, but for years down the road as well.
Failing to Hire the Right Professionals
Do not attempt to handle your divorce case and related financial implications on your own. With the right professionals, you may have the power to save more money than you spend on their hiring fees. Work with a divorce lawyer, accountant, forensic accountant, tax professional and others for the best possible financial outcome for your divorce case. Hiring the right Colorado divorce attorney can allow you to avoid major financial mistakes.