Top 6 Financial Mistakes to Avoid During Divorces

When you get divorced, ending your legal relationship is the easy part. The right to no-fault divorce means you can always end your marriage. However, that’s just the tip of the iceberg that is untangling yourself from your spouse. You also need to decide how to divide your assets and whether either of you will pay the other spousal support.

That’s much more complicated, so there is more room for error. Seemingly small issues during divorce can cause long-term financial problems if you aren’t careful. If you’re preparing to get divorced, you should watch for these six common mistakes to avoid during divorce to set yourself up for success in your new life. 

1. Rushing the Process

It’s natural to want to get your divorce over with. It’s a stressful and time-consuming process, after all. However, trying to rush through matters can put you at financial risk. 

Two issues can result if you try to hurry things up too much:

• Actual mistakes: Some matters take time. It takes time to thoroughly identify your marital assets and find an equal division. If your goal is speed rather than accuracy, you may miss critical details and find out later you missed out on the opportunity for a fair division of assets.
• Manipulation: If your spouse realizes speed is your only goal, they can use that to take advantage of you. They may make settlement offers they know are unfair in the hope that you’ll accept to get things over with. 

Regardless of the reason, it’s better to give things the time and attention they require rather than rushing just to end things a week or two sooner.

2. Refusing to Collaborate

You may not like your spouse right now, but refusing to work together can be financially harmful. Despite what popular media implies, most divorces are not resolved in the courtroom. Instead, couples often collaborate in drafting settlements that satisfy both parties. Alternative dispute resolution methods like collaborative law, mediation, or arbitration could help you avoid court hearings entirely. 

This matters because collaboration is usually faster and less stressful than going to court. It also provides more privacy and is usually less expensive than drawn-out court battles. Most importantly, it allows you to prioritize the assets and details that matter to you, leading to better outcomes for most couples. Even if you don’t think collaboration will work for everything, it’s worth attempting to potentially reduce the time you spend in court.

3. Failing to Appraise Property

Unless the only assets you have are cash and investment accounts, you should always have your property fairly appraised during your divorce. Even then, working with an experienced professional to determine how much of these funds are marital assets compared to separate property is worthwhile. 

Professional appraisals are crucial for assets that are harder to value appropriately, like houses, businesses, and intellectual property. The appraiser will give you a breakdown of how much each asset is worth now and what it may be worth in the future. This information is critical to fairly dividing your assets. Without it, you may struggle to achieve an equitable split.

4. Ignoring Potential Hidden Property

You probably don’t want to think your spouse could be hiding financial secrets from you. However, this is more common during divorce than you may realize. Many otherwise honest people will act on their emotions rather than their morals during divorces and hide assets to “win” or “get back” at their soon-to-be-ex. 

If something seems off in your spouse’s financial disclosures, it may be worthwhile to work with your attorney and a forensic accountant to get a better picture of their assets. Either you will find out they were telling the truth, or you will find assets that must be considered during your divorce. It’s beneficial either way.

5. Fighting for Assets You Don’t Want

The goal of asset division in California is to grant both parties half of their marital property. However, it’s easy to get caught up in the specifics of how that division is accomplished. You may find yourself arguing over who gets the car or the house when you don’t actually want these assets. 

These arguments are common, especially if your split involves hurt feelings. It may be tempting to fight for assets you don’t want just so your spouse doesn’t get them. However, don’t miss the forest for the trees. Remember your goals and ask yourself whether a specific asset matters to you before arguing for it. If you don’t actually want it, it’s usually a better financial decision to spend your energy and time elsewhere. 

6. Forgetting to Budget

When deciding how to divide assets and if spousal support should be paid, it’s easy to forget about the future. However, having a budget for your post-divorce life is critical to making these decisions. You need to know what your expenses and income will be before you can make an informed choice about dividing retirement accounts, homes, and businesses. 

Sit down and figure out your anticipated expenses and income after your split. Use this to understand what you will need to maintain your lifestyle. Having these numbers on hand will make it much easier to negotiate for or against spousal support and the division of important assets. 

Get Expert Legal Help With Your High-Asset Divorce

A skilled attorney is the best resource you could have during a high-value divorce. The experienced lawyers at Kaspar & Lugay, LLP, understand the financial complexities involved in splits like yours. They can show you how to avoid common divorce problems and keep your split on track. Learn more about how they can assist you by scheduling your consultation with the San Mateo family law firm today.