When you go through a divorce, make sure you are aware of common financial mistakes that some people make. Divorce can be a financially taxing process as well as an emotional drain. Many people are not aware how much a divorce could affect their financial situations. In fact, separating finances and achieving financial security during the divorce process is very important to understand.
1. Not Understanding Your Marital Finances
The first mistake that some people make when divorcing is not understanding their marital finances. In some relationships, one person handles most of the financial matters. He or she pays the bills, balances the budget, manages accounts, and knows the types of financial resources that the family has. In other relationships, the couple may have many different separate and joint accounts, making it difficult to track finances.
During a divorce, a spouse who does not handle finances or is not knowledgeable about them could find himself or herself in a tough situation. In these situations, the other spouse automatically has an advantage when negotiating asset distribution. He or she could even decide to hide assets or undervalue them.
If you are in this situation, you may have some luck in locating paperwork and account information on your own. Ultimately, you will need legal advice about how to safeguard assets to which you may be entitled in the divorce. Seek the help of a North Carolina divorce lawyer for information about your rights.
2. Underestimating Your Monthly Spending
As you fill out paperwork with your divorce lawyer, you will need to write down your monthly income and expenses. It may be tempting to save time by giving a rough estimate. However, if you underestimate your monthly spending, this could reduce your spousal support amount. In North Carolina, spouses may be eligible for support payments during separation and after divorce. Your income and expenses factor into the amount of spousal support that you could receive. There are many other factors involved in deciding spousal support amounts as well.
Rather than underestimating spending, you should track your monthly spending during your divorce. This is especially important to do during your one-year separation period. While it may seem like a lot of work with everything else going on, tracking spending could affect the amount of spousal support you receive or pay.
3. Not Keeping a “Safety Net” Fund
As discussed above, divorce can be a financially draining time. If you and your spouse have held joint accounts during your marriage, you may not have separate funds to rely on. You may find a “safety net” fund helpful as you go through the divorce process. It is very important that you speak to a knowledgeable divorce law firm about how to go about starting a safety net fund. This is because of North Carolina’s rules about equitable distribution of marital property and what constitutes separate property during divorce.
4. Assuming “Equitable Distribution” Will Be Fair
Some divorcing couples make the assumption that an “equitable distribution” of assets will be fair. This is not always the case. The value of an asset could be more complicated than just market value. Market value or purchase value does not always account for future value or hidden expenses.
For example, you may have a sentimental attachment to the family home and think you should keep it in the divorce. Your spouse’s 401(k) might have a similar amount of money in it as the home’s value. It sounds like you keeping the house and your spouse keeping the 401(k) would be fair. But you may not have evaluated the need for future major home repairs and the local real estate market. The amount of money you put into the house may not be equivalent to the amount in the 401(k).
Anyone going through a divorce in North Carolina needs a divorce attorney to advise on equitable distribution issues like this. Determining who receives which assets could involve complicated negotiations or a court hearing. Reach out for legal help as soon as possible if you plan to divorce.
New Direction Family Law Can Assist You
If you want to avoid making common financial mistakes during your divorce, the team at New Direction Family Law in North Carolina is available today to answer your questions. We will help you understand your legal rights and work hard toward your best outcome. Our attorneys are knowledgeable, effective, and compassionate professionals with decades of combined legal experience. Contact New Direction Family Law at (919) 646-6561 to schedule a consultation, or visit us at our website.