What are Common Financial Mistakes Made in a New Jersey Divorce?
When a couple is married for a long time, they often have their finances intertwined with one another. However, in the event that they find themselves in a situation of divorce, this can put them in a difficult position. The process of divorce requires an in-depth review of the expenses, assets, and income that both spouses brought to their marriage and how to separate them. Oftentimes, people underestimate how complex this process can be. It is because of this that it is important for spouses to be informed and have a thorough understanding so that they do not make avoidable mistakes. Continue reading below to learn more about the common financial mistakes that are made during a divorce.
Not Knowing Your Marital Finances
In order to reach a fair financial outcome in a divorce, it is important to determine where both spouses stand financially. This begins with a thorough review of all income and expenses. Both parties should review all sources of income they have with their spouse, including salary, investments, benefit plans, etc. This is especially important if one spouse handled the budget for the family, as they will have the advantage in knowing these finances already.
Underestimating Your Personal Monthly Spending
Each spouse should have an understanding of what they personally spend per month and what their cost of living will be once they are officially divorced and on their own. It is important to reasonably budget in line with your current standard of living while also factoring in future inflation, costs, and insurance. This is crucial in order to properly calculate alimony, as incorrect calculations could undermine your future financial needs.
Assuming Equal Division is Fair
The value of an asset is not necessarily defined by or limited to its market value. In addition to this, assets that generate income may be worth more than their market value. Instead of property being divided based on its current monetary value, it is important to consider the full value of the assets over time when determining how to split property “equally.”
Wanting to Keep Assets You Cannot Afford
There are often many assets that have an emotional value that a price cannot be put on. However, it is important to be realistic about what you can and cannot afford when facing a divorce. This can mean making difficult decisions, such as choosing to let go of a family home. Homes often have low returns on investment and sometimes result in negative returns. Holding onto the emotional value instead of focusing on the numbers can cause significant future financial struggles.
Not Securing Enough Alimony or Child Support
While modifications of alimony and child support settlements are allowed after a divorce, these are not easy to receive. It is important to make sure the terms in these agreements are thorough and stated clearly. In addition to this, it is possible to request that a spouse obtain disability or life insurance policies to ensure this support can still be provided if there are drastic changes in their circumstances and impede their ability to provide it.
Choosing the Wrong Attorney
Going through a divorce is already a time-consuming and stressful process. This is especially so when it comes to dealing with the financial aspects. These burdens can be reduced by hiring a proper attorney who can take the reins when dealing with these matters. It is also important to be sure an attorney is compassionate and does not cause further trouble during negotiations. The best attorney for a case will advocate for a spouse’s best interests and leave emotion at the wayside.
Contact our Firm
If you need an experienced legal team to guide you through your divorce, contact Townsend, Tomaio & Newmark L.L.C today.