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Three money mistakes often made in divorce

We see it time and time again - clients come to us after their marriages have ended and they need help fixing mistakes that they made during their divorce. They tried to represent themselves or made decisions before they fully understood all of their options.

Most of these mistakes were made during the property division process. People made choices that caused them serious financial harm. In this post, we want to discuss three of the most common money mistakes in a divorce, and the steps you can take to avoid making them in your case. 

Failing to close joint accounts

Many couples have checking accounts, saving accounts and credit cards that they share together. All funds go to one bank and they pay their bills and monthly expenses from the money that both of them earn together.

While this is an efficient way to create and manage a monthly budget, it does cause serious problems if the relationship begins to deteriorate. When couples start to think of divorce as a possible option, these funds become much more important, and could be the subject of major disputes during the property division proceedings.

In addition, leaving these accounts open exposes you to other more issues that could have a long-term financial impact that lasts well after the divorce has been finalized. For example, your spouse could simply take all of the money in an account and make you fight to get any of it back. Or, he or she could take the credit cards and run up significant debts while the divorce is ongoing. You could potentially be held responsible for those debts even though your spouse was the one who incurred the charges.

Accepting your spouse's picture of the finances

You may have a sound picture of what you and your spouse have accumulated during your marriage. However, you may not have a clear idea of the exact assets that will be subject to the property division process if you get divorced. This is especially true if you own a business together or have retirement accounts that have continued to grow over time.

You need to consult experienced professionals to ensure that you know exactly what assets must be divided during your divorce. If you settle too soon, you will be unable to revisit the agreement after learning of additional or hidden assets.

Moving forward without a plan

Sometimes you just have to get out of your marriage as soon as possible. It happens. But, you need to understand that once things are over, your financial situation will change fairly dramatically. You have to make sure that you know what you will need in order to meet your expenses after your divorce. Without keeping the big picture in mind, you could be putting yourself in a very delicate financial situation that may ultimately lead to bankruptcy.

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