Divorce is very stressful for people, mentally, emotionally, physically, and financially. People often are not thinking completely clearly when making many decisions during the divorce and often make decisions financially that may come back to haunt them. These mistakes can be easily avoided if people take a few simple precautions.
In many marriages, it is common for one spouse to handle the family’s finances. In these cases it becomes very easy for the spouse who handles the money to take advantage of the other’s lack of knowledge of their assets, making it possible to negotiate an unfair property settlement.
It is important for both spouses to have an accurate count of all of the assets, including:
- Real estate
- Retirement accounts and pensions
- Stocks and bonds
- Mutual funds
- Art, antiques, and other collectibles
Each party should also know how much debt the family carries and to whom the money is owed. Each spouse should also know the family’s total monthly income and expenses to determine whether the other may be trying to hide assets.
It is also important to understand the difference between marital and non-marital property, so each spouse is clear on what will be included in the property division. In the simplest form, non-marital property is property that each spouse had prior to the marriage and any gifts or inheritances that the spouse received during the marriage.
Determining what is and is not marital property can sometimes be complicated, however. Appreciation in value of non-marital property can sometimes be marital property and spouses may also mingle marital and non-marital property.
Transition to divorced living can be difficult because many people become accustomed to living on two incomes. It is important that people create budgets and stick to them, so they do not find themselves in financial trouble after a divorce.
Not Planning for Long-Term
Many people want to get the unpleasantness of divorce over as soon as possible, but in the rush to complete the matter, they may agree to property divisions that could jeopardize their futures financially. Each spouse should analyze the financial and tax implications of all of the assets that are involved. People should also account for the costs of keeping some of the assets, such as a house. A person should also consider the asset’s liquidity and his or her need for ready cash.
Property division is a very fact-sensitive process and should not be taken lightly. Contact an Illinois divorce attorney for help with your divorce to be sure plenty of thought is put into your asset division. Kathryn L. Harry & Associates can assist you with your divorce and be sure that you start your new life with all that you need.