Thanks to its emotional nature, divorce can be an overwhelming undertaking for just about anyone. Life is never the same during and after the divorce process, and one of the areas that will be greatly impacted by divorce is both parties’ finances.
The financial decisions you make during and after the divorce process will affect your finances. As such, it is important that you steer clear of these financial mistakes while going through the divorce.
Overlooking the impact of taxes on your divorce settlement
Most people fail to understand that once the divorce is finalized, both parties will be taxed based on the marital assets they walk away with. Before accepting any settlement, it is advisable that you determine the value of your share of the marital assets based on an after-tax basis. It also pays to seek professional opinion on how the proposed property division model will impact you before accepting the offer.
Overlooking marital debts
North Carolina is an equitable distribution state. Meaning, during the divorce, the court will divide both marital assets and liability equitably. While declaring the marital assets for purposes of property division, be sure to list the liabilities as well. This will eliminate the risk of one party having to walk away with the marital liabilities that should otherwise be shared. Regardless of who incurred it, any debt incurred while in marriage remains the responsibility of both parties. As a rule of thumb, consider paying off any marital debts you might have accrued before finalizing the divorce.
Hiding marital assets
Divorce is, without a doubt, a difficult undertaking. It is not unusual for divorce to bring out the worst in people. And spouses use a wide range of strategies to hide marital assets, including through trusts and unexplained donations. It is important to understand that hiding marital assets is a serious financial mistake and offense that can hurt your divorce case.
Divorce can have a long-term effect on your finances. Avoiding these mistakes can help turn a new page after the divorce without hurting your finances.
