Avoid Common Financial Mistakes When Divorcing Later in Life
Many people make financial mistakes when divorcing later in life such as keeping the marital home when it doesn’t make financial sense and not consulting the proper experts.
According to a study published in 2013, divorce in the U.S. is declining for all age groups except for those aged 50 years and older. According to the study, the divorce rate among those aged 50 years old and older increased from one in 10 marriages 20 years ago to one in four currently. Divorcing later in life can carry financial risks for the unwary. If you are considering divorce, you should be aware of some common mistakes people make when divorcing later in life.
Being ignorant of debts and assets
One of the most serious mistakes you can make when getting divorced is not knowing the full picture regarding your family finances. If you do not know all of the assets that you hold as a couple, you will not have a clear idea about what to negotiate for in the property division – and you risk getting an unfair share of marital assets. Similarly, if you are unaware of all the lines of credit held in both you and your spouse’s names, as well as the balances on those accounts, you will not know how to negotiate responsibility for paying the debts during the property division. Additionally, you need to be aware of the balances on all the accounts because if your spouse does not pay the debts for which he or she is responsible, your creditors could pursue you for payment.
One of the best ways to educate yourself about your financial position is to obtain a copy of your credit report, as well as your spouse’s, so you can review all of your open accounts.
Keeping the marital home
Many people are tempted to fight to keep their marital homes in the property division. Many believe that it is wise to hang onto real estate, as it is an asset that usually appreciates. However, it is not a liquid asset, meaning that you cannot readily access its value if you need to in an emergency the same way that you can with liquid assets like investment or banking accounts. Additionally, a house requires money for maintenance and insurance. You may find that you cannot afford to keep your house when it is just your salary paying the mortgage and maintenance, and that it is wiser for you to negotiate for different assets.
Not seeking the help of professionals
You may be tempted to try to save money by handling all of the financial aspects of your divorce by yourself, without hiring professionals to assist you. However, this may end up costing you in the long run if you make mistakes. Many aspects of property division carry tax implications, and it is wise to discuss the tax consequences of various possibilities for dividing your marital estate with an accountant. Additionally, you should see a financial planner to create a post-divorce financial plan. Your financial plan can also give you an idea about what assets you should seek in the property division.
Finally, you need to have a seasoned divorce attorney advocating for your interests during the divorce process. A skilled divorce attorney can help guide you through the process and make sure that your property division is fair. If you are considering divorce, talk to a divorce lawyer who can advise you about your options.