Getting a divorce can cause a lot of fears. One of your biggest concerns as you separate may be your wealth and property. Ending your marriage can impact your financial well-being, especially if you make some costly errors along the way.
Thankfully, you can protect your assets. Here are some of the most expensive mistakes you should avoid so you can limit the financial consequences of your divorce.
Mistake one: Ignoring tax consequences
When you are dividing your marital property, make sure you compare taxable and nontaxable assets. Pre- and post-tax dollars are important for determining the true value of an asset. For example, if you get the house, you will face different tax consequences if you decide to sell it than if you receive distributions from a retirement account.
Mistake two: Missing assets
One of the first steps you should take when filing for divorce is making an inventory of every asset and liability. If you do not factor in every asset, you may not get a fair settlement. Do not forget about any stock options, business interests, pensions or bonuses. Your spouse may attempt to hide certain assets, so you may need a forensic accountant to help you discover any hidden money.
Mistake three: Raiding your retirement funds
Divorce can get expensive, but you should avoid tapping your retirement accounts at all costs. You may feel the temptation to use retirement funds to cover divorce bills or pay off debts, but this will only hurt your financial situation. Keep this money for your retirement. You do not want your divorce to ruin your retirement savings. Take out loans or use credit cards before you even consider using your retirement funds.
Breaking up with your spouse will inevitably impact your finances, but you can safeguard your assets by avoiding these common missteps.