Avoid Financial Mistakes in a Divorce

Divorce is wrought with emotional highs and lows to give a psychologist convention an adequate amount of clients for a lifetime. Every decision you make from the point of filing onward can leave you in a constant state of wondering if you're making all the right choices. The one place you can't afford to make any mistakes though is with your finances. However, in divorce case after case, lawyers inform that a person's financial foundation is the place where the most common mistakes are made. Budget Loss. Probably the first thing that happens in a divorce is that people toss whatever budget they had out the window. Either that or they are so caught up in attorney fees and litigation that a budget gets ignored. Creating and sticking to a budget to get you through a divorce will help to keep your spending in check and ensure that there is money to pay the attorney with when all is said and done. Update Your Important Papers. If your ex is listed as a beneficiary to any insurance policies, retirement plans or wills, you should have that changed now. By not getting that information updated, you stand to risk a future spouse or children from rightfully having what should be theirs and not your ex's. Take the time to update any important information before the rest of your family loses out. Separate Accounts. While it was fine to have joint accounts when you were married, not separating them could cause you financial ruin or something close to it. The longer you keep your finances and accounts together the more potential your ex can do to your credit score. What this means is that should they default on any loans, debts, or payments which has both of your names tied to it, (houses, credit cards, and vehicles are the most common) you can and will become financially responsible. It is a sound idea to separate yourself from the other party as soon as you can. Take advantage of a free credit report at this point to see if anything happened during the process of your divorce which might make credit repair necessary. Beware of the Tax Man. Even Uncle Sam wants a cut of your assets in a divorce. Not properly covering any taxes due on assets during a divorce settlement also poses the possibility of causing credit damage. Some items may have capital gains adhered to them when your divorce settlement is final. This all depends upon the worth of the assets and the agreement in which you and your ex reach as well. Consult with an accountant or credit specialist to find out how you can go about making sure the IRS gets what they should and how you should file your yearly taxes as well. Of course these aren't all of the financial mistakes you can make during your divorce. However, it does provide you with a good start on how to protect yourself and your financial future after you begin life again as a single person. Financial directory