3 financial mistakes divorcing spouses in Connecticut should avoid
Divorcing couples in Connecticut should be wary of forgetting assets or hidden costs, misunderstanding their property rights and fighting needlessly.
Most people who are preparing for divorces in Shelton appreciate the significant financial challenges that this life change can bring. Unfortunately, they may not be as familiar with the common errors that can exacerbate the economic impact of divorce. Many of these individuals can benefit from understanding and avoiding the following harmful financial missteps.
1. Forgetting assets
During divorce, some people may lose out on property they are entitled to because they undervalue assets, forget about them or aren’t aware of their existence. According to The Wall Street Journal, divorcing adults should take the following steps to prevent this outcome:
- Hire professionals to evaluate the worth of any marital assets that are difficult to value, such as a family business.
- Make a list of physical property that either spouse owns, including real estate, furniture, vehicles and collector’s items.
- Collect official documentation, such as tax returns and account statements, so that marital assets and liabilities can be accurately inventoried.
People who don’t understand their property rights may also be at risk for losing out on assets during the divorce settlement. Spouses in Connecticut should understand that all property and debts obtained during marriage legally belong to both spouses. State courts also have the authority to divide property that one person acquired before the marriage between both spouses. The final division of assets and debts does not have to be equal, but it must be equitable.
2. Ignoring hidden costs
When negotiating a divorce settlement, spouses should also be careful to consider the hidden costs that might come with different types of property. For example, houses and vehicles often have maintenance and insurance costs that can add up over time. According to USA Today, the cost of selling certain assets in the future, such as real estate, can also be substantial.
Divorcing spouses should always be careful to consider tax liability as a potential hidden cost, according to The Wall Street Journal. Some assets, such as tax-deferred retirement accounts, may have a much lower value after taxes have been taken out. Spouses should also consider the tax implications of other aspects of a settlement, such as spousal support awards. The final settlement should reflect the adjusted value of each asset with the cost of taxes, insurance and maintenance factored in.
3. Fighting excessively
While it is important for spouses to protect their financial interests and legal rights during a divorce, USA Today notes that excessive fighting can be counterproductive. Extended disputes can increase legal expenses and reduce the assets that are available to be divided between both spouses. Therefore, divorcing spouses should try to pick their battles carefully and limit unnecessary conflict.
To strike the right balance between protecting personal interests and avoiding needless disputes, spouses may benefit from consulting with an attorney. An attorney may be able to help a person develop a tailored strategy for pursuing an appropriate settlement that suits his or her needs and long-term goals.