Common Financial Divorce Mistakes That Could Cost You

 Posted on December 16, 2015 in Divorce Finances

Divorce is a stressful, emotional time, and simply getting through the process is a challenge on it's own. Financial planning for your future may be the last thing on your mind, but a little preparation during your divorce process can make a huge difference in your success as a single person. Unfortunately, emotions can cloud our judgement, and many people going through divorce make costly mistakes, often without realizing it. Here are three financial divorce mistakes that could seriously cost you in the future.

You Lack Financial Understanding

If you were not a part of your household or business finances before your divorce, it is time to start studying. Too many people head into divorce without even a basic understanding of their family's finances. How can you fight for what is fairly yours, or determine if you got a fair settlement, without knowing what was there to begin with.

If you and your spouse are still amicable towards each other, ask them if you can be more involved in the family finances. Even just reviewing your shared accounts is helpful. Do your best to get an overall understanding of where your family's assets are located, and how much is stored in each place. If your spouse is unwilling, or seems shady about finances, consider hiring a forensic accountant. A forensic accountant can sift through your previous financial history with your spouse, reviewing income statements and tax documents, looking for any holes. Much like a private investigator, if a forensic accountant finds anything suspicious, they will continue digging.

Unfortunately, finding money that your spouse has hidden from you is easier said than done. The best form of prevention is awareness to begin with. Married people would be wise to keep tabs on their shared finances. Once both partners have a basic understanding of their income and shared assets, it is much more difficult for one spouse to hide anything.

You Do Not Put Things in Writing

Be sure that everything you and your spouse agree to during your divorce ends up in writing. People run into problems with this all the time. Their soon to be ex makes a promise, but nothing ends up getting written down. Then, when it comes time to fulfill the promise, there is nothing legally requiring your ex to actually come through.

Inheritance is a great example of this. Your ex may say that when he or she passes away, they plan on passing everything down to your children. Fast forward ten years, to when your ex is remarried with a new family, and they are probably much less inclined to give their inheritance to only your shared children. If you did not get your agreement in writing, there is nothing you can do.

You Did Not Hire a Qualified Attorney or Financial Advisor

Divorce is tough if you are going it alone. Having a qualified team of experts around you is the best way to ensure you get the outcome you deserve from your separation. The average divorce does not typically require a whole team of attorneys, but if your case is special for any reason, such as a high net worth case for example, be sure to hire an attorney that is qualified to handle your case. Spending time with an unqualified attorney can be extremely expensive and ultimately gets you nowhere.

Many people assume that hiring a financial advisor is not necessary, unless there are large assets involved. In fact, however, having a financial advisor involved in your divorce, high net worth or not, can be very beneficial. A financial advisor can help ensure you get what you are entitled to, and can also help you plan for your life as a single person. People often hire financial advisors after their divorce, unfortunately after many important financial decisions have been made. If you believe you are headed for divorce, speak with a financial advisor about your options.

Nobody wants to look back years after their divorce and regret the decisions they made. Being on top of your finances before, during, and after your divorce is the best way to come out of it successfully. You will thank yourself down the road, when you received what you were entitled to, and are capable of managing your finances on your own.