If you are considering divorce, it is vital to plan it in advance so that you can make sensible, balanced decisions at a time when emotions may well be running high. Below are five common mistakes when divorcing that you should try to avoid:
Mistakes when divorcing
1. Overlooking assets
For most couples, one spouse predominantly deals with the finances for both of you during the marriage. However, when that marriage begins to falter, the spouse who has been less involved often begins to feel that they have made a mistake.
It is vital to understand what assets and liabilities your family has. To that end, both spouses should make sure that they have access to bank statements, tax returns, statements from investments, pension statements, household bills, mortgage statements and any other important documentation.
You should also ensure that you have an inventory of valuable property. You are likely to be aware of any shared real estate, but you should not overlook collectables, furniture and of course any assets held solely in the name of your other half.
If there are any assets that are more difficult to value, such as business interests, stock options and pensions, you may need the assistance of a forensic accountant or actuary. This expertise can be costly, but if the assets are valuable enough, it is likely to be money well spent.
If you overlook something valuable, you could wind up receiving less than your fair share when it comes to dividing the assets.
It is important to keep track of joint debts as well. If you and your spouse have joint loans or credit cards, you are still equally responsible for paying them both during and after your separation.
2. Pursuing revenge
The less you spend, the more you keep.
Think wisely before hiring costly experts who advocate hostile tactics in an effort to enhance your share of the assets – and try to restrain your own impulse to do the same even if you want to punish your ex. Even if the plan works, you could simply end up with a bigger share of a smaller pot.
Bear in mind that every pound that you or your spouse spend on the divorce is a pound that you cannot then agree to divide between you. Couples are usually significantly better off if they either agree matters direct or through a mediator or solicitor rather than issuing court proceedings and fighting tooth and nail every step of the way.
3. Trying to stay put
Battling to retain your fair share of the matrimonial pot makes financial sense. Battling to keep the family home, in comparison, could cost you money in the long run.
Staying in the family home is often tempting, especially if it appears to be the easiest way to ensure that your children remain in the same school. But a household that took two people to run is often too expensive for you to take on alone.
The more sensible strategy may well be to sell your home and split the proceeds in the course of the divorce proceedings, meaning that both parties share the risk and cost associated with the sale itself and enabling you to purchase something more manageable and without the accompanying memories, should they be painful.
4. Underestimating expenses
In addition, it is essential to have a grip on your other expenses; those beyond housing.
You should calculate how much your family spends on food, clothes and other essentials, as well as luxuries that can be cut back if needed. This exercise is important when considering a claim for spousal maintenance and of course, when looking at the affordability of a home post-divorce.
5. Believing that the work is done
Divorcing couples often put so much time and energy into splitting their assets and obtaining their decree absolute that they believe everything to have been taken care of when the papers are approved by the Court.
However, there are other key financial matters that divorced couples should attend to on their own.
For example:
- Be sure to update your Will. Many people forget the need to do that, which can put your intended beneficiaries in a difficult position should anything happen to you;
- If you have a Power of Attorney that names your former spouse, that should be updated;
- The titles for any property, cars, accounts or other assets that were held jointly should be transferred into your sole name;
- It is also often advisable to change the passwords on your accounts, which should include not only bank accounts but also your email, Facebook and Twitter accounts, etc.
How can Nelsons help?
For more information or if you need help with a divorce, please contact our expert Family Law team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.