Five Costly Mistakes To Avoid During Your Divorce
The word “divorce” is synonymous with “loss.” Loss during a divorce is usually defined by a loss of time, money and relationships. Loss also occurs when there is a failure to preserve and/or increase the value of marital assets, such as real estate, stocks or other investment accounts. Here, we will examine five costly mistakes to avoid during a divorce that will save you time, money, relationships, and unnecessary losses.
- Failing to Maintain or Increase the Value of the Marital Estate:
Home: The family home is usually the parties highest valued marital asset, as such it is usually the asset most argued over. Resolving issues involving the disposition of the marital home early in your case can eliminate liabilities in the future. If the home is sold, it can also free-up funds necessary for each party to begin rebuilding their separate lives.
Fair market rental value & other expenses: In the event that a spouse chooses to remain in the home, they must realize that under most conditions the remaining spouse will be fully responsible for the mortgage payments, utilities, insurance and the possibility that the remaining spouse may owe their ex-spouse a portion of the Fair Market Rental Value on the home. These are financial decisions that a spouse needs to make with great consideration.
Vehicles: One of the biggest components to a divorce proceeding is the division of marital assets. Vehicles usually decrease in value but are assets that can be sold or divided among the parties easily and without the need for a court hearing. By dividing or selling the family cars the parties are moving forward in the divorce process and liquidating assets that can be converted to cash and easily distributed to the parties.
Stocks/bonds/retirement plans: It is imperative that each spouse makes a full disclosure to the other spouse regarding their knowledge of each asset they own, whether they believe the asset is their separate property or not, a full disclosure must be made so that your Florida family law attorney can assist you in equitably dividing accounts, and obtaining Qualified Domestic Relations Orders (QDRO’s) when necessary, in order to divided certain retirement and pension plans. Separation of these plans will help secure and build the spouses individual financial future.
- Failing to insure Support Orders with Life Insurance:
Speak to your attorney about whether it makes sense or is necessary to secure your alimony award with life insurance as authorized under the law.* If you are a spouse that has been ordered to purchase or maintain a life insurance policy to secure alimony, you should determine if there is a way you can capitalize from this order, perhaps by obtaining an Indexed Universal Life insurance policy that may have other benefits or riders from which both spouses can financially benefit.
- Failing to Undertake Necessary Discovery:
Although we expect our spouses to adhere to their fiduciary duties and fully disclose all marital assets, one must still perform their due diligence, in which case discovery requests may be necessary. Overlooking assets can be a critical mistake in you obtaining your equitable distribution of the marital assets. It is imperative that you know the extent of the family’s assets and debts, and that you make an inventory of valuable property.
- Failing to Assign Marital Debt:
Distributing community debts is just as important as dividing community assets, and should be done during the divorce process, not after. Eliminating debt is an important element a divorcing spouse must consider as they embark on their new life as a single person.
- Failing to Consider Implications of a Change in Tax Filing Status:
As a divorced spouse you will be filing individual income tax returns once the divorce is final. Capital gains from the sale of the family home, or other marital assets can have a significant impact on the amount you pay in taxes. Speaking to your CPA or financial advisor to determine how to best report the gains on joint or individual income tax returns, and to strategize with your attorney regarding these issues is important.
Work With the Right Divorce Attorney
Divorce doesn’t always have to be acrimonious or financially devastating. As discussed here, with proper preparation, due diligence and having the right Florida family law attorney by your side, your divorce will have the greatest results. Get the experience your case deserves. Contact Arwani Law Firm, PLLC today.