If you’re looking for a “good divorce” these will hold you back.
Getting divorced is one of life’s most stressful events. And it can also be one of the most expensive. If you’re currently going through the process – or you’re just about to – there are some financial pitfalls that it’s worth making the effort to avoid.
Lawyers will clear you out
Legal advice is a necessary part of getting divorced, especially if your situation is complex. However, be wary when signing agreements for legal representation and make sure you’re fully informed about the fees that you’re going to have to pay. If possible, look for a fixed fee for the divorce, so the costs can’t escalate, and limit advisor involvement only to the parts of the divorce where you really need the help.
Emotional interaction can be costly
Divorcing couples fight. That’s a fact. However, if you can set aside the emotions when it comes to dealing with the money side of the divorce then the process will be much easier and will cost you less. You may want to exact revenge on someone who hurt you or you may be angry at the way you’ve been treated. However, if you let that spill over into deciding the practicalities then it won’t be just your ex who pays the cost.
Don’t get stuck with the debts
Shared debt needs to be dealt with on divorce and can be a flash point in terms of conflict. If one party feels like they never wanted the credit card that the other has used to pay for all their new shoes then arguments can ensue. If possible, try to pay off debts from shared savings before you get to the process of dividing up the finances in a divorce. It makes it much easier to agree a financial split if the debts are no longer part of the picture. After all, no one wants to end up with debt that was never theirs and needing to find loans for people with bad credit or need a guarantor loan.
Tax issues need to be factored in
There are multiple tax issues that could impact on the outcome of what you get from a divorce so these need to be considered early on. For example, which assets are likely to be tax deductible and who takes what tax status with respect to any children? Payments, such as child support or maintenance payments ,need to be carefully structured, as well as the cost of the lawyers’ fees.
Retirement savings don’t belong to one person
In many situations, pensions and retirement savings should form part of the financial settlement of a divorce. Both parties in the divorcing couple may be entitled to a share of the retirement pot and this can be pretty substantial. Avoid losing out during your divorce by making sure you know what retirement provision your other half has, as you may be entitled to a proportion of it when you split.
Don’t rely on the divorce settlement to live
For most people, a divorce settlement is helpful but isn’t going to allow you to live a life of luxury for the rest of your days. It can take some time to settle the financial side of a divorce and you’ll need to make sure that you’re financially self-sufficient as an individual, whatever your circumstances, now and once the settlement is agreed.