No one ever said that divorce would be an easygoing process. Not only can the dissolution of your marriage hit you emotionally and psychologically, but it could hit you in the pocketbook. Given this, you may want to be aware common financial mistakes divorcing spouses make. Avoiding such errors could possibly help save a divorcing person and their family money in a divorce:
Failing to inventory your possessions: As early as you can, you may wish to focus on making a list that is as complete as possible regarding every asset that you and your spouse possess. Include information about things like bank accounts, investment accounts, retirement accounts, vehicles, jewelry, art, furniture, pets, appliances and other items in this list. You might even want to do this before you file for divorce.
Forgetting about beneficiary designations: Many financial accounts and insurance policies have beneficiary designations associated with them. These designations will supersede anything written in a will. In other words, if your ex-spouse is still named as the primary beneficiary on your $500,000 401(k) account, your children, potential heirs and/or new spouse could be out of luck when it comes to trying to inherit the 401(k) proceeds.
Being sneaky with your finances: You need to be clear, direct and transparent with all of your financial dealings – even before you file for divorce. If the court determines that you took advantage of the fact that you knew you would file for divorce – by hiding money, transferring money out of bank accounts, or even racking up credit card bills – the court could make things very difficult for you during asset division. In fact, a family law judge might award the vast majority of your marital estate to the other spouse as punishment.
Spouses who educate themselves on divorce law and their marital property rights and have good guidance on these topics may know when their rights are being threatened and what they can do to protect such rights. Knowledge is power in all legal dealings, and this can be especially true when it comes to the divorce process.