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How to avoid common money mistakes in a divorce

On Behalf of | Apr 23, 2020 | Divorce

Divorce can be expensive, and people in Ohio may experience a lower standard of living afterward. However, there are steps people can take to protect themselves financially.

First, people should keep in mind that getting a divorce does not mean having to go through litigation. While this might be necessary for some couples, those who are able to negotiate an agreement may save money. Whether they reach a divorce settlement through negotiation or litigation, people should make a post-divorce budget. This can help them understand what they can and cannot afford on a single income, and it may help prevent other common mistakes. For example, some people might want to keep the shared home for sentimental or other reasons. The problem with this is that it may not be affordable on a single income. People might also neglect their retirement account or not be able to put away money for a child’s college education because their income goes to maintaining the home.

One option is selling the home, but this can have unexpected financial repercussions as well. There could be a capital gains tax on the sale as well as on the sale of some other property, such as securities. Finally, people should make sure they review their estate plan after the divorce and make any necessary changes to documents such as wills, powers of attorney, trusts and more.

An attorney may be able to guide an individual through the divorce process and help the person prepare for negotiations. This might include considering both acceptable arrangements for child custody as well as different scenarios for property division. Since Ohio is not a community property state, it is not necessary to divide all shared assets equally, but those assets should be divided equitably. This means that each person might end up keeping assets with different values.