Divorcing? 15 Costly Financial Mistakes
Settlements: 15 Critical Financial Mistakes Often Made in the Heat of Divorce
By LEE SLATER
6. Disregarding the Impact of Taxes in a Divorce Settlement.
The bottom line is the share of marital assets you get after the tax man gets his. Say your spouse handles all the investments and offers to split them 50/50. Sounds fair? I suggest you look at the value of your assets relative to your spouse on an after tax basis. Then decide if you like the deal.
7. Failing to Use Computer Models to Evaluate Settlements.
If you are trying to decide whether a divorce settlement is equitable and workable, you certainly want to know how you will be doing financially three, five or 10 years down the road. There are many interactive factors you must consider including assets, incomes, budgets, maintenance and child support, taxes, retirement plans, investments and educational expenses. Specialized divorce computer models produce comprehensive and realistic analyses of your post-divorce lifestyle.
8. Fringing an emotional attachment to assets.
The marital residence, the pension your earned, a painting purchased during your marriage -- these assets bring an emotionally charged debate to divorce negotiations. The fact is many woman can't afford the house and give a low priority to retirement planning. A house is an asset that has a low return on investment (real estate appreciates at the rate of 2 or 3 percent annually) and is a major cash expense (mortgage payments, taxes, repairs, heat and electricity).
9. Using lawyer as a financial planner, therapist or messenger.
One woman I spoke with ran up $35,000 in legal fees in just two months. Arrangements for her husband's parental visitations were made through their matrimonial lawyers. Attorneys generally charge $200 to $300 per hour ($450 for partners in well known New York City and Los Angeles matrimonial firms) and are not skilled therapists or certified financial planners. If you need emotional support, career counseling or financial analysis, utilize qualified professionals and save big money in lawyer's fees.
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