Costly divorce mistakes

On Behalf of | Feb 5, 2019 | Divorce, Firm News |

Married couples in Kentucky who are thinking about splitting up should carefully consider what they do before and during the divorce process. Certain actions and decisions can result in very expensive consequences. It’s important that separating spouses take care to avoid these mistakes when a divorce is on the horizon.

Not having all of the important financial paperwork on hand can result in monetary decisions being made without all of the necessary information available. Paperwork that details the balances and account numbers for financial accounts should be collected. It will also be necessary to obtain Social Security statements that show earning records and any projected future benefits. Divorcing individuals should also have documents that show how much was paid for significant assets and any major improvements made for the home. The information contained in these documents can be helpful with both the divorce settlement and planning for future taxes and retirement.

Not taking into account the tax implications of certain decisions is also a mistake. Assets that include property, investment and retirement accounts may have a certain current value. However, that value could increase or decrease depending on the type of tax treatment they receive in the future.

For example, in situations in which a Roth IRA and a conventional IRA have the same balance, the Roth IRA will be worth more. That’s because its withdrawals are not taxed during retirement. Other assets, such as stocks, may accumulate significant value but also be assessed significant taxes.

A divorce attorney may explain to a soon-to-be ex how certain legal strategies may help obtain the desired divorce settlement terms. Litigation may be used to resolve disputes regarding the division of marital assets and spousal support.