The 5 Most Common Financial Mistakes Made During A Divorce
Making sense of the financial aspects of divorce isn’t easy, especially during what is typically a stressful and emotional time for those involved. But financial settlements are a key part of the divorce process, and need to be worked through carefully and sensitively to ensure the best outcome for you and your family.
Here at Vines Legal, we’re well-versed in assisting our clients with financial settlements, and dedicated to ensuring the whole process runs smoothly. With that in mind, we’ve summarised 5 of the most common financial mistakes that clients can make, which we can help you avoid!
1 - Attempting to Hide Assets
It may be tempting to downplay assets that you don’t want your ex-spouse to have a share in following a divorce. But it’s strictly a bad idea; both non-disclosure of an asset, or being dishonest about its true value, means any financial settlement is open to challenges. Even if the settlement has been passed by the court, revealing non-disclosure at a later date could mean that your ex-spouse has the right to take you back to court. You may also be at risk of perjury if you fail to disclose your assets or income in full.
2 – Failing to Plan for the Future
Another common mistake that people make regarding finances is failing to plan for the future. Working out what finances you’ll need to survive on after you divorce is an important part of the process, and one that is key to your future wellbeing. Financial planning should include keeping track of your income and outgoings, as well as establishing what assets belong to the family, and what you need to live on comfortably after the divorce.
3 – Forgetting about Debt
Failing to take debt into account is another common mistake clients make. Unfortunately, you and your ex-spouse can both be held responsible for all debts, even if they are in your ex-spouse’s name. Cutting financial ties during a divorce is incredibly important to ensure that you’re protected in the event that repayments are missed. If you have no joint debts, a ‘notice of disassociation’ can be acquired which removes the financial connection with your ex-spouse on your credit file.
4 – Failing to Split Pensions
It’s easy for you to overlook pensions, but they are a key consideration and need to be included in your financial settlement. Once the value of a pension has been established, there are 2 commonly used options; pension sharing and offsetting. As the options are often complex, it is advisable to seek expert legal and financial advice.
5 – Trying to Save the Family Home
Of course, it is tempting to want to keep some resemblance of stability following a divorce by staying in the family home, especially if there are children involved. But its sometimes far more sensible financially to sell your home and split the proceeds between you and your ex-spouse, rather than trying a maintain a home that once benefitted from two people’s incomes. Buying something that is more manageable for the future, without the painful memories, may be a better option in the long run. Options here, however, need to be carefully tailored to the circumstances of the case and needs of dependent children.
If you want to avoid these common financial mistakes during your divorce, our professional and experienced team at Vines Legal can help. To ensure you achieve the best financial settlement for you, contact us on 01246 555610 for a FREE initial consultation.
By Vines Legal on 27 Oct 2020, 11:26 AM