The Most Common Financial Mistakes During A Dallas Divorce
It’s no secret that without accurate information, understanding and planning, a divorce can ruin you financially. People are sometimes so overwhelmed by the legal process, by their emotions, and their desire to get through the divorce as quickly as possible that they underestimate the details of the financial aspects and make poor financial decisions that have long-lasting consequences.
You and your ex probably had joint accounts and shared financial responsibilities during your marriage. These are good habits in a marriage, but if you’re considering divorce, you’ll need to look at your finances and make some tough decisions for yourself. People don’t realize how complicated such issues are or how vital smart decisions can be under these circumstances. Doing your research, taking time, thinking responsibly, and planning ahead are the best ways to organize your divorce finances.
So, to help you avoid falling into some of these traps here is a short list of some of the most common financial mistakes I’ve seen. This list should help put you in the right state of mind and give you an overview, but it’s not a substitute for the guidance of a good lawyer who’ll help you evaluate your specific situation.
Here Are A Few Ways To Avoid Making Financial Mistakes During Your Divorce
Trying to Rush Through the Divorce Process
When a marriage ends, you may want your former partner out of your life as soon as possible, I get it. But understandable as that may be, a hasty divorce is a problem because it might lead to an unfair and imbalanced distribution of assets. One spouse could take advantage of the other’s haste by convincing or even tricking them to give up and take a lot less than they deserve under the law and leaving them without the resources they need to start over. So, balance wanting to get things done quickly with taking the time to get what you are legally entitled to. Get the help you need to first inventory ALL assets, then make sure they’re characterized properly as community or separate property, then make sure they are valued properly, and then, and only then, consider a proper division. Depending on what’s at stake, do NOT try to do everything by yourself. Get the right help at the right time.
Losing Track of Joint Debts
Joint credit accounts or debts can cause problems. If you and your spouse have taken out any joint loans (house, car, furniture, anything), or joint credit cards while you were married, then the responsibility for paying off those debts falls equally on both of you. Even though your divorce settlement may say that your ex-spouse is responsible for paying off all joint debts, lenders won’t care, and they won’t waive your legal responsibility. If your spouse doesn’t pay, the creditors may still try to collect from you, and you may see a drop in your credit score. So before finalizing your divorce, consider a settlement that pays off all joint debts if possible so that each of you can start over after the separation. If that’s not possible, make sure you’re aware of this trap and deal with it accordingly. Get help from a good divorce lawyer with all your options and watch out for this trap.
Not Valuing Your Assets Correctly
Before you can divide your assets or even discuss it, you need to know what it’s worth and there are a lot of different ways to find out what is the current value of different assets. Some are simple, like bank accounts, some are more complex, like retirement accounts, and some are extremely complicated, like business values. Don’t rush this part. Make sure you have a good understanding of what something is worth before you start talking about how to divide it or whether you should do some horse trading. Then there’s the issue of how to handle assets that someone had before marriage. Don’t assume that just because it belonged to your spouse before marriage that you have no interest in it. There are exceptions to that rule that could be worth a lot of money.
Ignoring Hidden Assets
Spouses may try to keep some assets secret by using trusts, foreign accounts, or transferring assets to family or friends. And then there are assets like cryptocurrency that are extremely hard to find unless you look for them properly and quickly. If you want to make sure you don’t lose any of your rightful assets in the divorce, working with a good forensic accountant AND a good divorce lawyer who can help find hidden assets can be a big help. A good lawyer can also help you by getting a court order compelling your spouse to disclose their financial information and assets and make banks hand over account information once you’ve identified them as likely warehouses of your spouse’s hidden money.
Not Handling Retirement Funds Properly
Retirement accounts can get complicated with all the rules about who can own them, how money can be transferred and all the hidden tax implications. Whether it’s a pension, a 401K, an IRA or any other form of retirement account, make sure you get all the relevant information and have a qualified person evaluate what your share would be worth now AND in the future when your retirement age comes around. Depending on the type of retirement, you may need a specific court order called a Qualified Domestic Relations Order (QDRO) to get your share out of your spouse’s name and into an account of your own. Be careful with this part. I’ve seen way too many people, including bad attorneys, miss the importance of this and make mistakes that are worth hundreds of thousands and even millions of dollars, and this is something you won’t know about until the retirement age comes around, at which point it may be too late.
One final note! I know, there is a lot to think about during a divorce and it is easy to understand how it can become overwhelming. But if you take the time to inform yourself and weigh all the factors considering your situation and your hopes and dreams for the future, you can deal with it properly. If you want the best results, don’t try to do everything by yourself. Get the right help, act logically, and take it one step at a time. You’ll be fine.
The lawyers at the Ashmore Law Firm are expert, experienced and they care about your future. Schedule a confidential appointment with one of our lawyers and gain peace of mind by knowing your options.
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If you need to speak to an experienced divorce attorney please contact us online or call our Dallas office directly at 214.559.7202. We help clients throughout the Dallas area with all of their family law needs and look forward to helping you.
