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Common divorce financial errors

On Behalf of | Oct 22, 2020 | Divorce

Texas spouses often make mistakes when they are negotiating their divorce agreements. These errors can set them up for financial difficulty after the divorce or can result in them not receiving their equitable share of the marital estate. Here are some errors to avoid.

People make mistakes with investments

Not all assets are created equal when it comes to liquidity. Certain things like stocks can easily be sold, but there are other investments that do not have ready markets. This means that they cannot easily be converted to cash. In addition, retirement accounts have their own special rules, and there could be restrictions on cashing in these assets. This could result in a tax burden. Moreover, some spouses fail to account for the effect of taxes in other areas too, such as when they own a stock that has appreciated in value.

The failure to budget is a mistake

On a personal front, the biggest mistake that some spouses make is the failure to create a budget for their post-divorce life. Knowing what they need to survive after the divorce can help inform what to ask for in the settlement negotiations.

Finally, many spouses simply take the other spouse’s word for it when they declare what assets they have and what they are worth. This means that they forgo the chance to identify hidden assets and end up with less.

A family law attorney may stay on top of many of these issues during the negotiations. While an attorney may not budget for you, they might at least point out expenses that you may face in post-divorce life that you had not factored into consideration. The attorney may keep you from making common errors and help better set you up for post-divorce life.