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Avoiding financial mistakes during a divorce

On Behalf of | Jan 21, 2016 | Divorce

Statistics show that the rates of divorce filings tend to increase during the beginning of the year as people tend to be ready to start anew with the new year. Although many residents of California are mindful that their finances can be affected by divorce proceedings, they should also take care to avoid rushing through a divorce. It is prudent to take the time to consult with professionals to avoid actions that can have an unexpected and negative effect on their finances.

According to a 2014 survey conducted by the National Endowment or Financial Education, 14 percent of consumers admitted to lying about their earnings and 15 percent had a secret bank account. It is important to have a thorough record of all the assets owned by both parties of a marriage so that an equitable settlement can be reached. This includes detailing current and future cash and noncash property and making an effort to verify that there are no hidden assets.

Other actions that should be avoided by those getting a divorce include disregarding the effect of taxes on assets, maintaining joint finances, such as bank accounts, credit cards and mortgages, being sentimental about property and making decisions based on emotions rather than practicality and not being aware of how the laws within a jurisdiction can affect a divorce. Divorcees should also make every effort to avoid using their retirement funds to pay for divorce-related matters as the Center for Retirement Research at Boston College states that approximately only half of all households have enough funds in their retirement to live comfortably.

During a divorce, the fair distribution of assets is an outcome that is highly sought after by both parties. A divorce attorney could provide counsel regarding laws concerning property division and can help negotiate a fair settlement.