- Focusing on one issue – Instead beaming in on one single thing, such as keeping the home at all costs, try to be a big picture person.
- Failing to figure out what it will really cost you to live on after divorce – Don’t be short sighted: what appears to be an equitable division of property at a ‘break up’ time can turn out to be grossly inequitable due to tax consequences when assets are liquidated in the future to meet cash flow needs.
- Making financial decisions based on emotions – Make sure that your desire to make it go away does not cause you to “just” settle. If you can’t think clearly about your finances, engage the help of a financial divorce expert. In order to preserve/protect your net worth, work with an expert who understands how to interpret complex compensation (bonuses, stock options, commissions, self-employment income, etc.) and has had plenty of experience working with successful business owners, professionals but is also able to explain in a straight forward manner complicated financial stuff to the stay at home spouse and their attorney.
- Not considering the tax ramifications – A dollar of cash or home equity is NOT equal to a dollar of retirement assets. Use caution when trading assets with differing tax characteristics. Work with an expert who understands how the new tax law will impact your divorce!
- Assuming that a 50 – 50 split is the right way to go – What appears to be a win-win situation in the short term could actually be lose-lose situation for all concerned down the road.
When break up is inevitable, it is important to do your financial homework and seek a help from a divorce financial expert to help you avoid the financial pitfalls so common when emotions affect decision-making.
Denisa is a Certified Divorce Financial Analyst, Divorce Mediator, and Certified Financial Planner. For close to two decades she has been helping hundreds of couples with her unique set of skills sets to divorce smart.