Personal finances matters when getting divorced

| Apr 29, 2020 | Divorce |

In Virginia, personal finances matter when people are trying to start over after a divorce. It is the decisions that they make during the divorce that can affect their lives going forward. Thus, it is critical not to make mistakes in the divorce process that can throw a wrench into the post-divorce financial situation.

One of the foremost errors people can make is giving themselves too much of a burden financially after the divorce is concluded. Keeping the marital home at all costs is a prime example of this mistake. As a result, they will end up as “house poor,” where they can make their mortgage payment every month but have little money left for anything else. Another mistake that can take a large slice from liquid assets is the failure to anticipate that certain asset sales may produce a tax burder. For example, if a couple is forced to sell a stock that they jointly own during the divorce, capital gains taxes may be imposed.

Moreover, spouses can harm themselves by not having a concept of the realistic post-divorce budget. Some people may have a budget that assumes some of the parameters from their old married life while others may not even have a budget at all.

Many people simply are not focusing on things like this during the divorce process. Family law attorneys may help focus clients on planning for the future while they are making the present arrangements for the divorce. They could help their clients use the divorce agreement to establish a manageable financial reality for the future by negotiating terms that protect their interests.