Divorce can be costly, even after the divorce has been finalized. Mistakes in how a divorce is handled can have far-reaching consequences. Knowing how to avoid mistakes now can save you a lot in the future. Read on to learn how to avoid five big financial mistakes people make when divorcing.
Get a handle on finances now ¾ One of the biggest financial mistakes married couples make is enabling one spouse to have absolute control over the finances. If you do not know about your financial assets, get informed. Whether you are contemplating divorce or are already in the midst of one, make sure are aware of what financial accounts and investments exist and what is in them. In addition to bank and investment accounts, your finances also include legal documents, such as estate planning docs, deeds to property, tax returns and even life insurance policies.
Clear your name ¾ Division of debts and liabilities is a part of all divorces. Each individual will assume responsibility for paying off certain debts. While your divorce decree defines who will own certain debt, it does not change liability for lenders and creditors. The best way to protect yourself from potential collection efforts is to have your name removed from joint accounts once your divorce is finalized. You should notify all of your creditors, especially credit card companies, of the date of your divorce so you cannot be held responsible for debts your ex-spouse incurs after your divorce.
Don’t rush it ¾ You should not, under any circumstances rush your divorce. Divorce is a difficult process and it is natural to want to get through it as quickly as possible. The danger with accepting a settlement too quickly is that you risk agreeing to an unequal settlement or other conditions that will put you at a disadvantage. Do not let a divorce bully or anything else pressure you into signing your divorce decree until you are ready. It is important to listen to the advice of your attorney, or at least consult with an experienced divorce attorney, when making important final decisions regarding your divorce.
Hire a skilled attorney ¾ Often individuals will try to save money by completing divorce paperwork themselves using an online service or other template documents. This can spell disaster for those who are unfamiliar with divorce laws in Wisconsin. Not only do individuals leave themselves vulnerable to an unequal or incomplete settlement, but they also could face costly tax ramifications. Even with uncontested divorce, where both couples agree on the all of the issues, individuals are more likely to save themselves money in the long run if they hire an attorney to protect their interests or to address potential issues that you may not be aware of or think of.
Make sure retirement accounts are distributed properly ¾ In Wisconsin, retirement accounts are part of property division. To avoid any tax liability for transferring a retirement accounts as part of a divorce, a Qualified Domestic Relations Order or “QDRO” must be filed with the court. It is important to complete this process fully and properly and, it is so complicated, many attorneys hire experts to assist in the process. You do not want to jeopardize your rights or suffer negative consequences by improperly handling this situation. The best way to do this is to hire an experienced divorce attorney to assist you in your divorce and the division of your assets.