Avoid financial mistakes in a divorce

Wedded couples make financial decisions together throughout the course of their marriages. However, when a marriage in Alabama or anywhere else in the country ends, there are still many financial decisions that have to be made. Financial planners strongly believe that couples need to fully comprehend how the decisions they make during divorce proceedings will affect them in the future. They warn against making several mistakes in the process.

First, some spouses fight to keep the family home. However, with only one income going forward, that spouse may be unable to feasibly remain in the home. Some spouses are offered the right to stay in the home instead of receiving other assets valued the same. Advisers recommend taking the other assets since a home ultimately costs more since it has to be maintained.

Also, while comparable assets may be equally valued, taxes can make the scales tip somewhat. For example, one spouse may get assets in a checking account and the other’s assets are in a 401(k). The one with the checking account has a better deal since there are no fees for withdrawals. However, withdrawals from the 401(k) would incur taxes just like regular income.

Spouses sometimes fail to get a qualified domestic relations order to get their designated part of a retirement account. This court order allows an individual to withdraw from the account with no penalty. Finally, if someone is receiving spousal or child support, it would be wise to have a life insurance policy on the ex-spouse since the income could be replace should that person die.

Dealing with financial issues during a divorce can prove to be complicated. It is helpful to seek the guidance of a respected Alabama divorce attorney. An experienced lawyer will help clients navigate the complexities of the process and work toward achieving the best outcome in the proceedings.

Source: cnbc.com, “When it comes to divorce, not all assets are equal“, Sarah O’Brien, Sept. 22, 2017