Financial Mistakes to Avoid During Your Divorce

Divorce can take a toll on many areas of your life, including your finances. While you may know that you should do some things–such as tracking your expenses and income–immediately before and during your divorce, there are some other financial mistakes people in divorce make that you may not be aware of.

Spending Big Amounts Before the Divorce Is Final

You may be tempted to make big purchases you had been planning now because you’re not sure how your finances will be after the divorce. Presents for your children, a new car… you might not know how you will afford these things once you are separated, especially if your partner was the main income earner.

However, you should never spend large amounts of money immediately before or during your divorce. The court may view this as your attempt to waste or keep additional assets, and you can be penalized during the property division phase of your divorce because of it.

Making Legal Financial Changes Without Informing the Court

Don’t make any legal changes to your finances after you’ve filed for divorce. Changing the beneficiaries of your will or life insurance, for example, is something that may become a part of your legal proceedings, depending on your case specifics. If you feel as if something needs to be changed right now, speak to your family law attorney for advice before making those changes.

Leaving Any Joint Credit Accounts Open

Both you and your spouse are responsible for the debts run up on joint credit accounts. You will still share this responsibility even if you separate, so if you leave these accounts open and your ex-spouse runs up debt, you’re also on the hook for that money.

Notify any joint credit accounts in writing that you and your spouse are divorcing. Ask them to close the accounts once the balances have been paid off. This will prevent your spouse from using–and possibly abusing–those credit accounts. Keep an eye on those accounts as you pay them down. If you notice your spouse running up debt, contact your attorney immediately.

Not Catching Tax Implications

A divorce will impact the taxes you and your spouse pay. There are many tax-related issues you may have to handle, including who will get the tax exemptions for your children. Division of certain assets, such as retirement or 401(k) accounts have tax consequences.

The tax implications of your divorce will depend on your finances, what happens in your case and your personal situation. Work with a tax professional if you’re not certain which tax issues will come into play after your divorce so you’re not shocked by a large tax bill later.

Aiming for Financial Revenge

Divorce is an emotional process, but it’s also a legal one. If your marriage is ending on bad terms, it may be tempting to take some sort of revenge on your spouse. Money might appear to be among the best ways to do that.

However, whether you refuse to be upfront about your finances or sell off your ex’s’ belongings without their permission, these angry acts will end up harming you as much as they harm your spouse. The court will not take a kind view of any attempts to manipulate the finances or the divorce process itself, and you could be facing penalties in the property division part of your case for any attempts at financial revenge.

Preparing for a divorce is never an easy task. However, once you avoid some of the common missteps people take in the financial part of their divorce, you can set yourself up for a better post-divorce future.