Divorce is a challenging and emotional process, and financial mistakes during this time can have long-lasting effects. At Primus Family Law Group, we understand the complexities involved and are here to guide you through the financial aspects of your divorce in San Diego. Here are some common financial mistakes to avoid:
- Underestimating Living Expenses
A common mistake is underestimating future living expenses. For example, imagine Jane, who used to rely on her spouse for managing household finances, assumes she can maintain her current lifestyle without a detailed budget. Without accurate estimates, Jane might find herself struggling to cover her expenses post-divorce.
How to Avoid: Create a detailed budget considering all possible expenses, including housing, utilities, food, transportation, and even things like gym memberships and the rising price of gas. This helps in understanding your financial needs and securing a settlement.
- Ignoring Tax Implications
Tax implications can significantly impact your financial situation post-divorce. John, for instance, agreed to take the family home in the divorce settlement without considering the tax burden associated with property ownership. Later, he realizes the cost of upkeep and property taxes are more than he can handle.
How to Avoid: Consult with a financial advisor or tax professional to understand the tax consequences of your divorce settlement. This includes spousal, property division, and child support.
- Not Understanding Marital Debt
Divorcing couples often overlook marital debt. Sarah, for example, agreed to a settlement without considering the joint credit card debts. After the divorce, she was held responsible for half of the debt, affecting her financial stability.
How to Avoid: Ensure all marital debts are identified and divided equitably during the divorce process. Obtain a copy of your credit report to understand all outstanding debts.
- Overlooking Retirement Accounts
Retirement accounts are often a significant asset in a marriage. Mark agreed to give his spouse his retirement account in exchange for keeping his savings account, not realizing the long-term implications of this decision.
How to Avoid: Consider the long-term value of retirement accounts and how they are divided. A Qualified Domestic Relations Order (QDRO) can ensure retirement funds are appropriately split.
- Failing to Update Financial Documents
After a divorce, failing to update financial documents can lead to complications. Lisa neglected to change the beneficiaries on her life insurance policy, which still listed her ex-spouse. In the event of her death, her ex-spouse would receive the benefits, contrary to her wishes.
How to Avoid: Update all financial documents, including wills, trusts, life insurance policies, and retirement accounts, to reflect your new circumstances.
How Primus Family Law Group Can Help
Navigating the financial complexities of divorce can be daunting, but you don’t have to do it alone. At Primus Family Law Group, we are California Certified Family Law Specialists who can provide the expertise you need to address these concerns. Our team is here to guide you through every step, ensuring you make informed decisions that protect your financial future. Contact us for your free 30 minute telephone consultation to see how we can help you.