People from Jupiter to Wellington know that divorce is costly. As the rate ended marriages increases for individuals over 50, the cost can deplete retirement savings plans and doesn’t give the individuals much time to recoup losses over their remaining working years. According to an article by Elizabeth MacBride, one of the keys to minimizing the damage is to stay away from a few common snags along the dissolution of marriage pathway.
MacBride shares four hazards and offers ideas of how to make the path straighter on the way to a settlement.
- Hazard 1: Going to trial when not needed.
According to Justin A. Reckers, CEO of Pacific Divorce Management, of the 900,000 splits in 2011, only five percent went to trial. The ones that did tended to be high conflict, involved layers of finances and involved children. They also cost hundreds of thousands of dollars. The majority of couples can use other options, such as collaborative divorcing, to stay out of the court room and to save a great deal of money. Reckers reminds us of process by saying, “For most people, this is the largest financial transaction” they will experience in life.
- Hazard 2: Ignoring tax implications.
Assets are not always equal and not considering the repercussions of taxes can haunt you later. For example, $200,000 in cash is not the same as $200,000 in a retirement account. At some point, retirement income will be affected by taxes. Be sure to get help from an accountant or other qualified financial professional to make all these liabilities clear before a settlement is final.
- Hazard 3: Not demanding the full financial picture.
Enlist the help of a forensic accountant or similar professional to find any hidden assets your spouse might have. You have the legal right to the information. Once the report is present, you’ll have a better idea of what might be a fair settlement.
- Hazard 4: Letting Emotions decide.
Since this is a business transaction, albeit with a lot of emotions attached, you must make pragmatic decisions when it comes to finances, family visitation, etc. Get help from professionals who can assist you in processing your emotions and who can teach you the legal process and how it will affect you financially in the long term. Then make a plan based on the facts.
Using these practices will not suddenly make your dissolution of marriage inexpensive, but it can help reduce the overall cost. Every bit of money saved during a dissolution of marriage can help you establish your new financial life after the settlement is finalized.