The property division process is often one of the most contentious aspects of any divorce. That's not exactly surprising, since valuable assets like the marital home, family businesses, retirement benefits, etc. are often on the line during the division of assets and liabilities.
Understanding common mistakes people make during property division enables you to avoid those pitfalls and pursue a more favorable outcome in your property division case. Read on to discover some common property division mistakes you can't afford to make.
Mistake #1: Not Considering Taxes
When you're going through a divorce, the last thing you probably want to think about is taxes, but do yourself a favor and think about them anyway.
Failing to consider what next year's taxes will look like is one of the most significant financial mistakes people make during property division disputes.
For example, let's say you want to keep the marital home. Will you have to pay estate taxes for it? Can you afford them alone? Do you want to keep the marital home out of emotional attachment, or as an investment? If you want to keep it as an investment, do you live in a good housing market? Will you be able to sell your home for a profit in a few years? If you sell, will you have to pay a capital gains tax?
These are the kind of questions you want to be asking yourself as you progress through the property division process. Having a lawyer with experience navigating property division cases and retaining the help of a financial professional like a certified public accountant (CPA) can help you do the right research moving forward with your case.
Mistake #2: Failing to Think Long-Term
In a property division case, it's easy to get caught up in the emotional attachment you have to certain assets. But will you really want that leather couch five years down the line?
View the property division process as a sort of new beginning. Now's your chance to get rid of things you don't really want or won't use, and start a better life for yourself. Selling off a marital asset and using the profits to buy yourself something that reflects your tastes and desires more will make you happier and healthier in the long run.
Mistake #3: Underestimating Post-Divorce Financial Costs
The divorce process in and of itself is expensive, but so are all the things that need to happen post-divorce. Some common post-divorce costs are:
- A down-payment for a new house or apartment;
- A new vehicle;
- New everyday items (silverware, cleaning supplies, tools, etc.);
- New furnishings (chairs, tables, etc.);
- New items for your kid (if you need any);
- The list goes on.
Many people underestimate just how much capital they'll need to rebuild their life post-divorce. You should work with an accountant to figure out what your post-divorce expenses will look like, and devise a strategy to combat them. You might need to play some financial Tetris to set yourself up for success post-divorce.
Mistake #4: Failing to Value Assets and Liabilities Properly
A thousand dollars in your bank account is not worth the same amount as a thousand dollars in taxable assets, or a thousand dollars in an investment portfolio or retirement account.
You should work with a financial professional to accurately assess how much your assets and liabilities are really worth. Overvaluing an asset or undervaluing a liability can wreak havoc on your life financially, and the last thing you need right now is more stress.
The property division process is never easy, but having the right lawyer at your side can help you navigate it with confidence.
To schedule a consultation with an experienced property division lawyer, contact us online or via phone at (631) 237-9525.