5 Major financial mistakes when considering divorce

Here are 6 simple, but often overlooked financial mistakes people make when considering divorce.

Being a Financial Victim
If you are or you think your spouse is considering divorce, make copies of all important financial documents such as statements from banks, stockbrokers, partnerships, real estate records, etc, and also documents that relates to your life style such as checking accounts, charge card statements, tax returns. Although Colorado laws requires production of the same information, it is sometimes difficult to motivate the other party to gather it once the process has begun. Also, if you believe that your spouse may try and liquidate or retitle marital assets, notify the account holder in writing of your divorce filing. If this does not stop the transaction, you can get a restraining order from the court. During this time period, keep an eye on cash in joint checking, brokerage accounts or cash value of life insurance. Backing out these transactions later on can be very expensive.

Not Considering Mediation before Litigation
If you and your spouse are agreeable to trying to reach a fair settlement, and if joint parenting is workable mediation WILL save thousands, if not tens of thousands of dollars in legal fees, long term emotional damage, and will provide more flexibility then the litigation process. If you try mediation and it does not work, you can always hire attorneys. But if you hire attorneys first, the court system requies them to perform thousands of dollars of work in a very short time after they are hired. Be prepared for a lawyer fees in the first 60 days to exceed $2500-$5000 in many cases.

Hiring the Bulldog Lawyer to Punish Your Spouse
Bad idea. First, except in extremely outragous cases, divorce cases are determined by equitable distribution – not fault of one party. Being an asshole is not illegal. Second, once hired, your bulldog lawyer attorney will work your case hard at your financial expense. High legal fees means one thing – less money leftover for you and your ex to divide. A better financial result is living financially well post-divorce.

Emotional Attachment to Assets
The marital home and pensions earned are the two assets that bring the most emotionally charged debate to divorce negotiations. The fact is many people can’t afford the marital home and give a low priority to retirement planning. The house is an asset that has a low return on investment (real estate appreciates at the rate of 2 or 3 % annually) and is a major cash expense (mortgage payments, taxes, repairs, heat and electricity), while the retirement plans have low cash expenses and generally higher appreciation rates than the home.

Failure Consider Professional Post-Divorce Financial Planning
The one truth of every divorce is that the two separate households will cost more to operate than one, but income to support both remains unchanged. Professional financial planning can help you transition from married to single life by setting new financial goals, finding realistic expectations for your finances, and producing written plans for you to follow to make your long term finances a success story.