Even in the best-case scenario, separating from your spouse can be a difficult task. In the midst of the emotional rollercoaster and logistical issues, it is not unusual to ignore key financial decisions—or even make rash and financially damaging judgments.

While this is the case, you do not have to accept a significant reduction in your savings. With the correct approach, planning, and assistance from family lawyers, you can reduce the financial impact of divorce.

To protect your family’s financial future, take time to learn about the significant financial blunders to avoid during divorce (and what to do instead).

Wasting assets out of spite

Spiteful spending can be appealing during a tough divorce, but it doesn’t only affect your ex-spouse. It can also result in a lower divorce settlement sum for you. Furthermore, risky activity might deplete the income available to pay off marital debt, child support, and other financial commitments.

Instead of wasting marital assets out of spite, focus on your future and collaborate with your family law attorney to develop a settlement that adheres to equitable distribution requirements.

Ignoring hidden assets and debts

In a contested divorce, one spouse may try to conceal assets or refuse to disclose obligations. This can happen when you transfer assets to friends or relatives, underreport income, or conceal funds in hidden accounts.

Conversely, some people may be unaware of obligations incurred by their spouse, such as credit card debts, loans, or tax liabilities, for which they may still be liable after divorce.

To be safe, you should be diligent in acquiring complete financial information. Does something feel odd about your spouse’s financial disclosures? For example, did your spouse previously use Bitcoin and other cryptocurrencies, but there was no mention of a crypto account in their initial financial disclosure?

Request these during discovery and/or seek the assistance of a forensic accountant as needed to locate hidden cryptocurrency accounts. Also, all debts must be declared and accounted for in the divorce settlement to avoid future responsibilities. You also should check your credit report to see if any shared credit card accounts have gone unnoticed.

Believing that your separate property is yours

Until your divorce settlement is finalized, you should proceed with caution when it comes to separate and marital property.

You may assume you have a right to the property you brought into the marriage, such as a retirement plan, automobile, or even a business. However, if the property’s value improved while you were married, your ex-spouse may be entitled to a portion of the gain.

Consulting with a family law expert will help you understand which properties are deemed independent and which are considered marital assets. If your attorney notifies you that specific property may be divided during the divorce proceedings, you should avoid seeking to transfer ownership of the property until matters are resolved.

Failing to get the accurate cost of your living expenses

Some people rush through the divorce process without taking the time to compile a precise picture of their living expenditures. “Ballparking” these funds is a common mistake that can result in erroneous alimony and child support computations.

For example, if one parent rushes and fails to account for all of the expenses associated with raising children, they may agree to lesser support payments than necessary.

However, if one spouse overestimates expenses, the other spouse may bear an unjust burden. Once mistakes are discovered, it might take time, money, and frustration to correct through the courts.

What you should do is take the time to properly collect and document all of your living costs, as well as those of any dependents. This includes housing, utilities, food, transportation, healthcare, and education expenses.

Don’t forget to budget for tutoring, sports fees, and other extracurricular activities, as well as costs associated with specific health and/or medical needs, school transportation, and summer daycare.

Providing this correct information can assist you and your children receive a fair and reasonable financial settlement that reflects their genuine needs.

Letting the court divide your assets

While the court has rules in place to assess an equitable distribution of property from a financial standpoint, it has little to no understanding of the sentimental value of marital assets.

This means that leaving the division of your matrimonial assets to the court may result in a settlement that does not reflect each party’s interests or expectations.

Instead of leaving everything to the courts, consult with your attorney to reach an arrangement. Mediation can help with all elements of the divorce process, including asset division.

Working with a divorce attorney who is trained in mediation can assist in producing a mutually acceptable asset allocation with less conflict than a contentious divorce. For example, you may be ready to give up your part in your ex-spouse’s retirement plan in exchange for a more significant spousal support payment.

Ignoring the impact of taxes in your divorce settlement

You should consider the tax ramifications of your divorce settlement because they can have a major impact on your financial outcomes. What appears to be a favorable settlement at first glance may quickly lose its appeal due to tax ramifications. For example, when monies are withdrawn from a retirement account before the account holder reaches a particular age, substantial tax penalties apply.

Before making a final decision, speak with a financial advisor or tax professional, as well as your family law attorney, to ensure that any potential tax ramifications are considered in the divorce settlement.

Not having a post-divorce financial plan.

Without a post-divorce financial plan, you may have difficulty adjusting to managing your finances and level of living as a separate home from your marriage. Not to mention that new financial commitments, such as spousal or child support, might put a kink in an otherwise adequate budget.

You may also expect to achieve new goals in your life following a divorce, such as returning to school or starting a business. Consulting with a financial advisor can help you lay a solid foundation for creating a post-divorce plan that takes into account your future spending and financial goals.

Parting shot

These are some of the mistakes you should avoid making when you are undergoing a divorce. To have an even easier time, work closely with top rated divorce lawyers Fairfax VA and financial experts to guide you through the process.