When getting a divorce, making mistakes is par for the course. Few people have been through the process before, and are thus approaching it with limited insight. Much like having your first child, the process is a learning experience. Few people get through it without making at least a few blunders along the way.
Having said that, it’s important to realize that big mistakes can cause major hassles – now and for years to come. The good news is that they’re easy to avoid. This article will discuss 5 things you should refrain from doing when going through a divorce.
#1 – Don’t Neglect Tax Considerations
Divorce can wreak havoc on your end-of-year taxes, particularly if you’re unfamiliar with how certain aspects of a settlement are treated by the IRS. For example, payments for spousal support are tax deductible for the person making them, and treated as taxable income to the person receiving them. Child support payments are tax-neutral. They are neither deductible nor treated as taxable income.
The point is to be aware of how taxes affect every aspect of your settlement. It is advisable to consult a tax professional experienced with divorce cases for guidance.
#2 – Don’t Cause Needless Stress For Your Kids
The most important thing to your children is that you love and support them. That gives them a sense of security when everything else around them is volatile. That may sound intuitive, but divorcing couples often become so immersed in their own affairs that they begin to neglect their kids’ needs.
Set aside time to address any concerns your children have about the upcoming divorce. Be upfront and honest with them. Also, avoid spending too much time talking the divorce since it is likely to be a heavy topic. Instead, spend time doing things your kids enjoy. The time you spend together will be more meaningful to them over the long run than the divorce.
#3 – Don’t Hide Assets
If you have significant assets that you want to prevent your spouse from obtaining in the divorce, you might be tempted to hide them. For example, you might play with the idea of moving money into an offshore account or putting a piece of property in a relative’s name. The risk, of course, is getting caught. Once it becomes known that you have lied about your money, a court will assume you may be lying about everything else.
Be candid about your assets when negotiating your settlement agreement. You might think you can get away with hiding them, but a good lawyer will eventually find them.
#4 – Don’t Make Big Purchases On Credit
There are several reasons to refrain from increasing your debt. First, following your divorce, you may need to buy numerous items, such as furniture, appliances, or even a car. You may also need to pay for expenses that were once handled by your spouse, such as food and utilities.
Second, resolving divorce cases can be costly depending on the circumstances. While an uncontested divorce may cost as little as a few hundred dollars, resolving major disputes in court may require $50,000 or more.
Don’t take out a new car loan until you’re certain about your finances (wait until the settlement has been approved by the court). And don’t use your credit cards to make any large, unnecessary purchases. Conserve your funds.
#5 – Don’t Take Your Spouse To Court
As we noted above, litigation can be very expensive. Couples often go into debt fighting each other in court about matters that could easily be resolved privately (and for less expense). Moreover, the decisions of the judge are unlikely to satisfy either party.
To be sure, if your spouse is being unreasonable about the settlement agreement and refuses to budge, you may have little choice but to ask the court to intervene. But exhaust other options, such as mediation and collaborative divorce, before choosing this expensive route.
Refraining from doing the 5 things we’ve highlighted above will save you time, money, and considerable frustration. Rather than treating your soon-to-be ex-spouse as an enemy combatant, work with him or her to finalize your divorce as quickly and smoothly as possible. It will be cheaper, cause less stress, and help you to get your life back on track.