Please note that I am an attorney presenting to you re-occurring financial problems that often arise during a divorce. I am not a financial advisor nor tax consultant!!! After you know what to look for, I strongly suggest you contact both a financial advisor AND tax consultant to assist you in making your Financial Decisions.
7 FINANCIAL MISTAKES TO AVOID DURING YOUR DIVORCE......
1. KNOW YOUR "LIQUID ASSETS:" Know which of your assets are "Liquid" Assets (immediate cash flow such as a bank accounts) versus an "Illiquid" Assets (not so immediate cash flow such as a house). You want to be sure that you have enough "Liquid" Assets to pay your household bills, children's school tuition, etc.
2. KNOW YOUR TAX BENEFITS/RAMIFICATIONS: With the division of property and child and spousal support, it is crucial that you understand the effect of taxes on your divorce, such as "Capital Gains" and the effect on your "Income Taxes," etc.
3. KNOW THE RULES OF YOUR RETIREMENT ACCOUNT: Although this is also a tax issue, you need to understand not only the tax issues but the potential penalties as well. Make sure to also understand the varying options of dividing your plan.
4. MAKE A BUDGET AND STICK TO IT: After separating from your spouse it is crucial to understand your income and expenses. Many individuals have a very difficult time adjusting to less income and adjusting their lifestyle. That's OK. A financial professional can sit you down and assist you with this process.
5. BEWARE OF "HIDDEN ASSETS:" Be sure that you are aware of ALL assets belonging to you and your spouse. Otherwise, your spouse may walk away with way more than deserved. Be sure to pay close attention to Tax Returns, Corporate Tax Returns, All Bank Accounts; IRA Statements, Children Bank Accounts, etc.
6. MAKE SURE YOU ARE AWARE OF ALL OF YOUR CREDIT CARDS AND CREDIT SCORE: When you are starting your life anew, if possible, you want to do so with good credit. Make sure you understand the debt, so you can be sure to protect yourself!
7. DO NOT ALLOW YOUR SPOUSE TO MAKE ALL THE FINANCIAL DECISIONS: Make sure you have copies of EVERYTHING, including your Tax Returns for the previous 2 to 3 years, Bank Statements for ALL of the accounts, Brokerage Statements, Children's Accounts, etc.
It's extremely simple to avoid many of these mistakes and I strongly recommend that you contact a financial advisor AND Tax Advisor before you make any financial decisions.
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