Psychologists say that divorce is one of the most stressful events people can experience, on par with the death of a loved one or loss of a job. Many people feel they are in no state to make important financial decisions during the turmoil that often accompanies divorce. However, people must divide property as part of a divorce, and many end up making costly errors. Massachusetts couples going through divorce can take steps to avoid common financial mistakes associated with divorce.
One of the most important things for those going through a divorce to do is develop a realistic budget so they know their incomes and expenses. People who do not have a budget often do not know the extent of their expenses and financial needs, so they have no clear idea of what they should ask for in property division.
People need to consider not only current expenses, but what they will need to be financially secure in the future. People should work with financial planners to create budgets and plan for the future before agreeing to property settlements.
Many couples with children assume that the parent who has primary custody should keep the marital home so the children have less change to deal with from the divorce. However, it might not make good financial sense for a person to keep a home. The house costs money for mortgage payments and maintenance. One spouse may not be able to afford that.
Additionally, a house is an illiquid asset, meaning that it is not easy to sell for cash should the need for money arise. By accepting the house in a property settlement, the spouse is sacrificing other assets that he or she can use immediately to pay for things.
A common assumption among those who divorce is that if the decree makes one spouse responsible for a debt in both spouses’ names, the other spouse is no longer personally liable for the debt. However, creditors can still pursue ex-spouses for payment of joint debts, no matter what a divorce decree states.
Those who divorce should ensure that their ex-spouses transfer the debt into the name of the person responsible for paying it under the divorce decree. People should also make sure to close all joint accounts with an ex-spouse so the ex-spouses cannot incur any more debt under both names.
Financial matters associated with divorce can be complex. Trying to make such decisions alone can seem like an overwhelming task. Those going through divorce should seek the assistance of an adept divorce attorney who can help advise them of their options.