Divorce is a difficult process, even in the most amicable situations. The parties often invest all of their mental and emotional effort in dividing assets, determining child support and addressing child custody issues. Unfortunately, this often comes at the expense of financial matters that will affect them both during and long after the divorce.
Here are a few key financial mistakes to avoid during a divorce.
Wasting Assets Out of Spite
Emotions often run high during a divorce, and bitterness can lead to attempts to punish your ex by hiding or draining assets. But just because the divorce is not final does not mean you can spend assets as you please. Efforts to hide or drain assets will not be viewed kindly by the court and may negatively affect the final distribution of assets or support orders.
Worse yet, one spouse may decide to bury the other in court battles, wasting assets the parties could better use for themselves, wasting emotional energy, and wasting the court’s time.
Keeping Joint Accounts
Upon separation, you should open your own bank and credit accounts to avoid your spouse draining joint accounts or using them to monitor your spending. This does not mean you should take all of the parties’ joint money – the court will not appreciate such tactics. But you should protect yourself from your spouse misusing joint assets such as savings accounts and checking accounts.
Similarly, because you can be liable for joint debts after the divorce, even if the court allocates a debt to your spouse, you should pay off joint debt or refinance it quickly.
Believing that Your Separate Property is Yours
Even though Washington is a community property state, this does not mean that any property you acquired before the marriage will be yours after the divorce. The court may still consider whether a “just and equitable” distribution of assets includes division of separate property. And remember, “equitable” does not mean 50/50.
Leaving Division of Assets to the Court
If you leave division of assets to the court, you will get a result that no one is happy with. And it will be the most expensive result. Parties interested in the best distribution of marital assets will put their differences aside to reach a mutually agreeable settlement. Considering alternative dispute resolution methods such as collaborative divorce can help parties preserve assets and make divorce less costly.
Not Accounting for Tax Issues
Failing to recognize the tax implications of divorce is a significant issue. You must understand the tax treatment of spousal and child support, as well as issues such as which spouse takes deductions for children and how to handle deductions for joint debt. The last institution you want involved in your divorce is the IRS.
At the Law Offices of Molly B. Kenny, our legal team knows how difficult it is to focus on every issue during a divorce. We can help you deal with all the financial issues surrounding your divorce. To arrange a private consultation, call us today or use our online contact form to send an email.