Divorcing? 15 Costly Financial Mistakes

    When you're going through the pain and emotional battles of a divorce, it's easy to overlook financial issues that can hurt you long after any hard feelings have healed. Here are 15 critical financial mistakes that you can't afford during a breakup:

1. Don't Be a Financial Victim.
If you suspect that your spouse is planning a divorce, make copies of all important financial records such as account statements (savings, stockbroker, real estate partnership) and data that relates to your marital life style (checking accounts, charge card statements, tax returns). If you believe that your spouse may liquidate or retitle marital assets, notify the holder in writing and get a restraining order from the court. Watch out for cash in joint checking, brokerage accounts or cash value of life insurance. If assets are taken, legal and forensic accounting fees could become excessive.

2. Not Considering Mediation.
If assets are moderate, joint custody is workable and your spouse is agreeable to a fair settlement, mediation will save thousands of dollars in legal fees, emotional aggravation and provide more flexibility then the adversarial legal process. Mediation is a bomb when one spouse is hiding assets or income or is unwilling to consider the needs of the other.

3. Hiring a Combative Lawyer as Punishment.
This is a very bad idea for two reasons. First, except in extremely egregious cases, divorce settlements are determined by equitable distribution laws and courts will not punish your ex-spouse financially for being a bad person. Second, your attorney assumes carte blanche to increase hours spent on your case. High divorce costs mean less money will be leftover for living. Treat divorce as a business arrangement and get your revenge by living well post-divorce.

4. Failing to Recognize your Enemy...the I.R.S.
Work together with a divorce financial planner or tax accountant to minimize the total taxes you and your ex will pay during separation and after divorce and share the money you save. Don't forget that both parties are liable for taxes due as a result of audits on joint returns. Don't count on the innocent spouse rule to protect you!!

5. For Producing an Accurate Budget.
Invariably, clients underestimate or omit expenses when they produce their initial budget for temporary maintenance (Pendente Lite) and later on in the divorce process they complain about not being unable to pay bills. Use a financial professional to help you produce an accurate and complete budget.