Some spouses enter negotiations at the end of a marriage as if they’re in competition for the larger pile of marital assets. Short-term winning can feel good during a Florida high-asset divorce, but the rush to claim every available piece of property may be counterproductive for long-term financial security.
Start with the marital home, often the most prized of marital possessions and frequently the most burdensome after divorce. One or both parties want to keep the family nest for the children or for happy memories. Recognize sentimental reasons don’t replace the second income that once helped pay the mortgage, upkeep, remodeling and taxes for the property.
Many spouses realize selling the house, splitting the profit and making new, separate homes is preferable to going mortgage broke in an attempt to preserve reminiscences of family holidays.
Divorce brings financial changes, often negative ones, no matter how wealthy you are. It’s a costly venture — one household divided by two spouses becomes two independent households.
To make the transition, identify the assets and debts you have, a process that often requires the assistance of a financial counselor, forensic accountant or asset valuation professional. A divorce attorney can put you in touch with these professionals.
Talk to legal advisers about splitting retirement plans like a 404(k), which requires a Qualified Domestic Relations Order, or QDRO, before division of the plan can take place. Pay off joint debt to avoid ongoing financial obligations with an ex and change estate plans and beneficiaries. Don’t discount the possibility a former spouse may try to hide marital property from you.
Create a new budget for your life ahead, one you can afford while factoring in inflation and taxes along with needs for children. Forward motion also includes resolving divorce disputes. The money you don’t spend fighting can be used to further both your lives and the lives of your children.
Source: The Wall Street Journal, “Divorce and Money: Six Costly Mistakes,” Veronica Dagher, May. 15, 2015