Preparing for divorce means preparing for property and debt division. As a result of your negotiations and compromise, as well as the other person's approach, you're not likely to get everything you want. However, when you understand your legal rights and the mistakes you need to avoid, it's much easier to come out the other side with a clear understanding of your situation and what the future will bring.
Here are just a few of the most common property division mistakes that people make:
- Forgetting about the future: It's so easy to focus on the here and now that you overlook the impact of your divorce on your life down the road. For example, if you're young, you may be okay with the idea of forgoing retirement assets in exchange for others. After all, you have more time to save, right? While it's true that you're not retiring any time soon, you may end up regretting this decision when it comes time to think about this.
- Keeping items you can't afford: For instance, many people fight to keep the family home because they think it's the right thing to do. Or they think that it's one of the best ways to get back at their soon to-be-ex-spouse. But here's a potential problem: You don't have enough money to pay for the home post-divorce, which leads you down a challenging financial path. By creating a budget before you discuss property division, you'll have a clear idea of what you can afford in the future.
- Neglecting to consider taxes: Taxes should be at the top of your mind when going through a divorce and dividing assets. Your goal is to minimize your tax hit, both now and in the future. Again, if you make short-sighted decisions, you could end up with a tax bill in the future that could have been avoided.
With so much happening, it's easy to make one or more of these property division mistakes as the divorce process unfolds. Through proper preparation, you can prevent these mistakes, among others, which will position you to receive the assets you deserve, without doing anything to harm your financial future.