Connecticut residents who are contemplating a divorce may be interested to learn about some of the most common financial mistakes spouses make during and after the process. Recognizing one’s current financial situation and the potential pitfalls that are inherent in it may give a spouse more of an advantage during the settlement process.
One common money mistake that many people make during a divorce is when they fail to consider their need for immediate cash flow. Grocery bills and other expenses may be higher as a single person, and this fact should be taken into account when deciding which assets to seek during a settlement. If a person has a lot of need for immediate cash flow, for instance, they may want to give up some property that will be valuable in the long term in favor of more liquid assets.
Some spouses fail to consider retirement assets during a divorce settlement. Since an IRA can be of significant value, it’s important that a transfer is conducted properly so that no taxes are incurred. While fighting over who gets what, some spouses may fail to take into account which assets are taxed. If a seemingly high-value asset comes along with an overwhelming tax burden, it may not be worth fighting for in some cases.
In addition to the financial pitfalls that are common in every divorce, a high asset divorce may have an infinite number of other ones. When a divorce involves a significant number of high-value financial assets and property, a lawyer may be able to help smooth out the process. Before helping a client to seek the assets they wish to receive in a settlement, a lawyer may be able to counsel them about which assets would most benefit their unique financial situation.
Source: Market Watch, “Divorce? The 6 worst money mistakes“, Leslie Thompson, September 23, 2014