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Financial mistakes people make during divorce

Your divorce is going to have a big financial impact on the rest of your life. As such, it's very important to step back, take the emotions out of the process and think about the realistic financial ramifications of every decision you make. This may sound clinical and calculating, and that's exactly how you need to approach it.

As you do, here are a handful of common mistakes to avoid:

  • Having no access to money when the divorce begins. Don't just assume access will be easy after you tell your spouse you want a divorce. Do you have credit cards and bank accounts in your own name?
  • Not gathering important documents in advance. Examples include your will, your estate plan, your tax returns, paperwork from your investments, copies of insurance policies and more.
  • Not understanding your debts. Remember, dividing assets is only half of it. You also have to divide many types of debt.
  • Not taking stock of significant assets. This process can take longer than you think, especially with things like art, real estate and family-owned companies. Official valuations may need to be done, as the value could be vastly different than what was invested.
  • Failing to understand what assets are really worth. For instance, perhaps your home is worth $1,000,000. You may get to keep it in the divorce, but can you afford the taxes? What about upkeep? What about insurance? You have to factor in all of these costs to understand the true value and your financial position.

The key is simply to prepare in advance. Understand your legal position, the options you have and what steps to take to get ready even before you file.

Source: Forbes, "Three Types of Financial Mistakes Divorcing Women Make (And How to Avoid Them)," Jeff Landers, accessed March 06, 2018

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