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Common financial errors people make during a divorce

On Behalf of | Dec 7, 2021 | Divorce |

When a marriage does not work out, divorce may be the right step. It does create many complexities, with financial ones being among the most challenging. A divorce decree in Texas need not lead to financial hardships, provided the spouses take steps to address money matters. Understanding some common financial trouble spots could lead to avoiding costly mistakes.

Critical financial issues during a divorce

Among the most crippling financial matters to deal with would be debt, and a married couple may amass a significant amount. Sometimes, one spouse may not realize obligations exist in both names or how much. Performing a thorough accounting of all assets and liabilities in joint and individual accounts could contribute to effective divorce settlement negotiations. Determining who pays what debts and how much may move things towards an amicable outcome.

Such detailed accounting steps may uncover hidden funds, such as cryptocurrency accounts. Unfortunately, a spouse might try to hide assets from the court. Hopefully, a comprehensive audit could end such behavior if it takes place.

And then there are possible tax matters to consider. Are the spouses filing joint returns? If so, both parties become responsible for the tax obligations. Or, one spouse could cover the taxes in exchange for receiving something else. Negotiations may lead to varied outcomes on a case-by-case basis.

Planning for the future post-divorce

Figuring out a post-divorce budget may be vital for future financial health and stability. Living as a single person after many years as a married person might result in “financial shock” when the newly divorced spouse discovers the monthly costs of rent, insurance, and other necessities. A single income might not be enough to cover everything, so perhaps downsizing one’s lifestyle after a divorce may be necessary.

One typical error in judgment spouses could make involves fighting bitterly over the family home. If one monthly income cannot cover the property’s costs, the home could cause financial troubles.

Seeking an appropriate amount of spousal and child support might help someone land on proper fiscal footing. Asking for too little, on the other hand, may prove regrettable.