Top 3 Stupid Divorce Mistakes
When you are facing a life changing decision like divorce, what do you think you will find more valuable: someone to make you feel better by saying that nothing has to change, or someone who will give it to you straight, no chaser? I feel strongly that not enough people in the world of divorce professionals will truly tell it like it is. They tell you what you want to hear which can lead you to make some costly mistakes. Easily AVOIDABLE mistakes; mistakes that need not happen!
Here are a few avoidable mistakes I see repeatedly when it comes to divorce.
#3 – The settlement doesn’t take taxes into effect – AT ALL!
We all know that Uncle Sam will dive into our pockets at every opportunity. Absolutely do not agree to a settlement without knowing the tax implications! What people often find is that the tax burden on their half of the marital assets is significantly higher than their spouse’s making their “half” of the assets worth significantly less than they thought! More specifically, don’t expect your attorney to do this! Attorneys are experts in LAW, not finances, so be sure a Certified Divorce Financial Analyst (CDFA) is part of your All Star Divorce Team!
#2 – Pensions are split 50/50 but no one knows what that really means.
Over and over and over I see divorce decrees that order pensions split 50/50 but no one has any idea what will actually happen. When do you start collecting? Is there an option to take a lump sum? Will there be a cost of living increase each year? What if you or your spouse dies? Will it keep paying? Will it double? When I ask these questions, no one has ANY IDEA what the answers are. Really? How can you possibly agree to a settlement without understanding something so crucial to your retirement?
#1 – Drum Roll – The biggest mistake I see is keeping a house you can’t afford.
I understand you can get emotionally tied to the family home and really want to stay. Before you even consider this option, you must do a budget. I also strongly suggest you meet with a financial planner. I have witnessed where one or two years down the road the spouse who “won the house” has run out of cash and realized that they can’t sell a window to put food on the table, they can’t refinance because now they don’t have enough income, and they have no choice but to sell. And incur 100% of the selling costs– versus splitting it 50/50 with the ex if the house was sold as part of the divorce. Stupid, stupid, stupid.
And completely avoidable.
So listen, I know “stupid” is not a very nice word and ignorance is probably more accurate. But please, realize you don’t know what you don’t know. Bring in the right professionals for your divorce to make sure that you are making the best decisions you can! Don’t go this alone. Let us help.
As always, if I can ever be of assistance to you or someone you know, please do not hesitate to call or email me directly at 803-576-4932, Amanda.Gunn@raymondjames.com
Sincerely,
AMANDA SIMCONIS GUNN, CDFA®, AAMS®
Financial Advisor
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