Going through a divorce is a difficult process legally, emotionally, and financially. Navigating this challenging landscape requires a thoughtful and strategic approach to financial decisions that can have a lasting impact on one’s future.
While it is important to learn what you need to do to protect yourself during this time, it’s also just as important to learn what NOT to do. From the division of assets to spousal support and child custody arrangements, here are 13 financial mistakes not to make in your divorce planning:
Believing that a 50/50 division of property is the same thing as a fair division of property.
Keeping the house when you can’t afford to.
Deciding financial issues one at a time instead of understanding how they affect each other.
Failing to guarantee alimony and child support payments with life insurance on the person who is supposed to pay.
Failing to make the spouse who receives alimony or child support payments the owner of the life insurance.
Believing that your settlement must conform to what a judge would order if your case went to court.
Seeking financial advice from someone whose expertise is the law.
Failing to include the present value of a pension among marital assets.
Failing to include transaction costs in the settlement when those costs may be years in the future.
Using unrealistic assumptions about inflation and investment returns.
Believing that spending retirement assets before age 59.5 will always result in a 10% IRS penalty.
Failing to consider creative financial solutions.
Failing to ask, “How do I know that I will be financially secure after my divorce?” before signing your divorce papers.
While every divorce is unique, taking a proactive approach to financial matters can ultimately lead to a more stable, resilient, and prosperous post-divorce life. Having a caring and experienced financial professional at your side can help you remain protected, and RMG Advisors is here to help.