Getting Divorced or Separated? 7 Financial Mistakes Not to Make

divorceBreaking up is always hard to do. But just because your life has been upended by a divorce or separation, it doesn't mean your finances have to suffer, too.

That's exactly what can happen, however, if you make any number of wrong moves when you're unwinding a relationship.

Here are seven financial mistakes you must avoid once you decide to end a marriage:1. Thinking that a mediator will protect your financial interests.

Many of us think that all divorces inevitably devolve into epic, drawn-out battles over money and property, complete with bitter screaming matches, chronic stress, and "I'll get you!" style threats, kind of like The War of the Roses, the 1989 film that starred Michael Douglas and Kathleen Turner.

But that's the Hollywood version of a worst-case divorce scenario.

In real life, although lots of couples do experience very bitter divorces, it's also true that when many people break up, one party in the relationship will try everything possible to avoid unnecessary drama. This individual attempts to "make nice" to avoid a prolonged divorce and generally aims to ratchet down any lingering tensions.

For these people, retaining a divorce mediator or arbitrator is one way to accomplish a less combative divorce. A mediator is an impartial divorce specialist who works to help couples reach an "equitable" divorce settlement.

But be warned: Hiring a mediator just for the sake of "impartiality" or in an attempt to "keep the peace" is usually a bad financial move – a really bad one – particularly if you assume that a mediator will look out for your best interests.

"The primary goal of the mediator is to get a settlement. And any settlement means the mediator has done his or her job," says Susan Carlisle, a Los Angeles area CPA who specializes in family law. "Although the best mediators do their [best] to get the settlement as equitable as possible, it's your job to negotiate well for what you need and want. The mediator can't do that for you."

That's why the best mediators always recommend that each party in a divorce also have their own consulting attorney.



2. Hiring the "best" lawyer that money can buy

Just because you should hire an attorney to handle your divorce doesn't mean it should cost you and arm and a leg. "People generally think that the more expensive a lawyer is, the better they must be. This is not always the case," says Jonathan Blumenthal, a certified financial planner and senior vice president of Peak Capital Investment Services.

Others want to bring out the all-star legal power in order to get back at a spouse, prolong the process or simply "win" at all costs. "That strategy works really well for the big gun [attorney] but not well for the person getting divorced," says Carlisle. "Unfortunately, lawyers make a living off people's insecurity, pain and desire for revenge. But it almost never works."

Carlisle notes that in California, where she resides, the rates for some high-end attorneys can hit $900 an hour. That may be affordable for divorcing celebrities and CEOs but not for the average person. When hiring such high-priced attorneys, Carlisle says, "the problem is, middle-class people wind up spending $50,000 on a divorce that really should have cost them $10,000."

So what's the best alternative to getting a mediator or hiring a high-priced attorney? The solution may lie in "collaborative law," a process that lies somewhere between mediation and litigation. It's where two attorneys and the couple are committed to not going to court, but you each have a lawyer that looks out for your best interests.

"I think you definitely need representation when going through a divorce," Blumenthal says. But his advice is to take the time needed to interview several attorneys to find the right fit for you – someone qualified and affordable given your budget.

3. Keeping joint credit cards and loans

Once you call it quits in a relationship, you need to separate your finances ASAP – and try to save money during your divorce.

One reason to close joint credit cards and loans is that each of you will be 100% financially liable for debts incurred – even if the other person racked up the bills.

Additionally, says Blumenthal, "even if your divorce starts out cordial, things can change quickly when people go into survival mode." You don't want a cash-strapped or bitter ex-spouse to start running up credit card debt, suddenly stop paying bills, or begin incurring financial obligations for which you could be held responsible.

4. Insisting on hanging on to the family home

Hanging on to the family home can be a mistake both financially and mentally, experts say. "Financially, you better make sure you have the income to support the family bills and the household," Blumenthal cautions. "Mentally, going through a divorce is one of the most difficult things someone can go through, and staying in the family home makes it very difficult to move on."

Still, many divorcing people, especially women, are adamant about keeping the family home. It's often a misguided effort to provide stability for the kids.

"But kids are flexible," says Carlisle, who has consulted in more than 400 divorce cases. "It's important to try to keep the kids in the neighborhood where their friends are and where their school is," she advises. "But that doesn't mean keeping up an expensive home you can't afford."

5. Trying to maintain the exact same lifestyle

Before your divorce, you may have taken regular family vacations, eaten out whenever you wanted, and had your three kids enrolled in tennis classes and soccer lessons, as well as the after-school band club.

In your post divorce, life, however, you'd be wise to accept a simple truth and break it gently to your children: You and the kids can't do everything you previously did. "There are now two households to support," Carlisle says, which will greatly impact the family's finances. "Trying to maintain the status quo will only stress everyone, especially the parents."

6. Having a weak property settlement agreement

A divorce agreement – sometimes called a property settlement agreement or a marital settlement agreement – is an all-important document that acts as a kind of blueprint to what's going to happen in your post-divorce world financially and otherwise.

Who gets the house? Who keeps the good china? How will investments be split? And who pays alimony or child support to whom and for how long? All these things, and more, will be spelled out in your property settlement agreement.

Problems erupt, however, when your agreement fails to account for any host of potential issues that not only may arise but are almost guaranteed to come up. For instance, if there's a "change of circumstances" – say, the kids' needs change dramatically, or one party makes a lot more or a lot less money – in most states, either side can go back into court and ask to either receive more financial support or pay less financial support.

If your marital settlement agreement doesn't plan ahead for such contingencies, expect to endure a lot of back-and-forth and potential legal wrangling with your ex down the road. Indeed, the ink is barely dried on many divorce agreements, says Carlisle, "before someone is back in court, demanding a change to the agreement."

She cites an interesting case now before a New York court in which a former couple – who divorced in 2006 – equally split their sizable assets and property.

The man laid claim to millions of dollars in investments. But it turns out the funds he sought to get – and did indeed obtain – were monies invested with the notorious financial swindler Bernie Madoff. The wife, for her part, got other investments and a swanky Manhattan apartment.

Thanks to Madoff's multibillion-dollar Ponzi scheme, the husband's investments went up in smoke. So now the husband is back in court seeking a do-over of the divorce agreement. It remains to be seen how a judge will rule in the case.

7. Failing to change your will and insurance policies

Let's face it: You're breaking up for a reason. One or both of you really doesn't want to be so intimately tied to the other person. So after a divorce, why do so many couples keep the financial purse strings attached in ways that could back to haunt them? A case in point: keeping an ex spouse as an insurance beneficiary or heir in your will.

Sometimes, people simply forget to change these documents. Other times, they think "I'll get around to doing it later" or "What could it hurt for now?"

Well, it can cause plenty of problems if one spouse remarries – and Carlisle says divorcing men typically remarry within two years – and then that person passes away. The first wife, or previous spouse, gets all the money, and the new spouse might be left in the cold. Not exactly what most people would want to happen after their death.

"When you go through a divorce, you need to make sure you go back and change all your beneficiary information on all accounts and policies," advises Blumenthal. "Regardless of what you have in your will, if your ex is still the beneficiary of your IRA, for example, that will supersede your updated will."

By avoiding these seven financial mistakes after a divorce, you'll take away some of the sting of what can be an emotionally and economically taxing experience.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum

66 Comments

Filter by:
Andrea Ramsay

My name is Andrea Ramsay from USA My boyfriend and I were happy as far as I could tell and I never thought that we would break up. When his cousin died in a tragic car accident he went back to Philippine for a week to be with his family. I could not go because I was in the middle of entertaining out of town clients for work. He did not seem to be upset that I could not go so I let him be. The next thing that I know, he reconnected with an old friend from high school that he had a crush on years ago and they started to have an affair! I had no clue what was going on until a month after he came back from Philippine.He proceeded to see both her and I until I caught him testing her one night. I confronted him and he told me the truth about what happened. We broke up and went our separate ways. Neither of us fought for our relationship. I was angry and decided not to be upset about it and just keep it moving. Then after about a month of not speaking to him I became sad. I wanted him to tell me that he wanted to be with me and not her. I contacted Dr.Agu for a love spell and he totally helped me! he was able to get him to miss me to where he wanted to get back together again. He had a lot of regrets and felt bad for not fighting to keep me and for cheating in general. He values our relationship so much more now and we are together now! You can also get your lover back with the help of Dr. Agu contact him through his email: agulovespell@hotmail.com

April 05 2014 at 2:05 PM Report abuse rate up rate down Reply
Danny Wayne

I do not know how to thank GREAT VUGA for bringing happiness back to my family. My name is Danny Wayne and i do really wanna tell the whole world that there is a spell caster called GREAT VUGA that is so real and genuine. I never believed in any of these things but when i lose my wife for 4 years, i required help until i found Vugalovetemple@gmail. com A great spell caster, and he cast a love spell for me, and he assured me that I will get my wife back in just 48hours but i was in doubt, and after the spell has been cast, 48hours later, just as the spell caster said, my phone rang, and surprisingly it was my wife who has not called me for the past 4 years, and she made an apology for the pain she has caused me and she told me that she is ready to come back home for me. GREAT VUGA really made her to know how much i loved and needed her. And he also opened her eyes to picture how much love we have to share together. With this testimony right now i am the happiest man on earth and our love is now stronger than how it was even before our divorce and that is why I will keep sharing this testimony all over the world. All thanks goes to GREAT VUGA for the good work that he has done for me. Here is his email address if you are having the same or similar problem contact him now because he is very powerful and he will always help you. Believe him and do all he ask you to do and never doubt him in any way. Contact him now on Vugalovetemple@gmail. com

March 24 2014 at 12:26 AM Report abuse rate up rate down Reply
Evans Temple

THANKS TO GREAT DR evans FOR SOLVING MY PROBLEMS HIS EMAIL IS (evanstemple52@gmail.com)

i was married to my husband for 5 years we were living happily together for this years and not until he traveled to Italy for a business trip where he met this girl and since then he hate me and the kids and love her only. so when my husband came back from the trip he said he does not want to see me and my kids again so he drove us out of the house and he was now going to Italy to see that other woman. so i and my kids were now so frustrated and i was just staying with my mum and i was not be treating good because my mother got married to another man after my father death so the man she got married to was not treating her well, i and my kids were so confuse and i was searching for a way to get my husband back home because i love and cherish him so much so one day as i was browsing on my computer i saw a testimony about this spell caster DR evans testimonies shared on the internet by a lady and it impress me so much i also think of give it a try. At first i was scared but when i think of what me and my kids are passing through so i contact him and he told me to stay calm for just 24 hours that my husband shall come back to me and to my best surprise i received a call from my husband on the second day asking after the kids and i called DR. evans and he said your problems are solved my child. so this was how i get my family back after a long stress of brake up by an evil lady so with all this help from DR evans, i want you all on this forum to join me to say a huge thanks to DR evans, and i will also advice for any one in such or similar problems or any kind of problems should also contact him his email is evanstmepl52@gmail.com he is the solution to all your problems and predicaments in life. once again his email address is (evanstemple@gmail.com)

HE IS SPECIALIZE IN THE THE FOLLOWING SPELL.

(1) If you want your ex back.
(2) if you always have bad dreams.
(3) If you want to be promoted in your office.
(4) If you want women/men to run after you.
(5) If you want a child.
(6) If you want to be rich.
(7) If you want to tie your husband/wife to be yours forever.
(8) If you need financial assistance.
(9) How you been scammed and you want to recover you lost money.
(10) if you want to stop your divorce.
(11) if you want to divorce your husband.
(12) if you want your wishes to be granted.
(13) Pregnancy spell to conceive baby
(14) Guarantee you win the troubling court cases & divorce no matter how what stage
(15) Stop your marriage or relationship from breaking apart.
(16) if you have any sickness like ( H I V ), (CANCER) or any sickness.
(17) if you need prayers for deliverance for your child or yourself.
once again make sure you contact him if you have any problem he will help you. his email address is (evanstemple52@gmail.com) contact him immediately.

March 13 2014 at 11:19 PM Report abuse rate up rate down Reply
Angelica Londos

Hello
My name is Mrs Angelica Londos from united states, Daly city ca. i am married with two kids. Life has been a misery for me and my kids for over six years when my husband dumped me for his new mistress due to some minor misunderstanding that we had.
So he engage in a fight with me and throw me out of the house, so all through these sorrowful period of my life, i have been in pain. So one day, as i was browsing through the internet, i came across many post about spell casters testifying how they were helped by them so i decided to seek help and advice. but naturally i didn't believe in spells or magic powers but due to the fact that i was deeply in love with my husband, i decided to go for a try, So i came in contact with Dr. Aire of drairesolutioncenter@gmail.com but before i contact Dr. Aire, i was scammed by alot spell casters who makes me believe that they can help me. So because of all these, i almost lost hope that i can't get my husband back anymore so when i contacted this Dr. Aire, he assure me that he will help me to reunite my marriage, so without demanding any single cent from me, he did a spell for me and he advice me to wait for just 24 hours. I actually waited as he said, so when it was 24 hours after he did the spell, my husband actually called me on my mobile phone and started apologizing for everything that he had caused me and the kids. This was how my marriage was reunited again and Starting from this point till date, i and my husband has been living peacefully and happily. Anybody viewing this testimony should please stop by and read and if you are so interested in contacting Dr. Aire for any help, simply do that via his email id (drairesolutioncenter@gmail.com) and remain happy.
Thanks.

March 13 2014 at 7:44 PM Report abuse rate up rate down Reply
Maris William

Great thanks to Priest Korofo who help me bring back my ex boyfriend...

My name is Maris, am from London i was in love with a guy called Jermaine will both love each other very much, to cut the story short something happen and he left me for another woman, i love him so much that i always want to be with him, he left me just because i refuse to come to his house when he asked me to come, i beg him to come back but he refuse i tried all my possible best to get him but the more i try is the more i lose him, so i have know choice than to contact a spell caster this was really bad almost all the spell casters scam me and collected my money this was very serious so i contacted one again and i said to my self how long will i continue to be losing money that i don't even have, but when i contacted this email address called greatkorofosolutionhome@gmail.com i told him everything about my boyfriend and how i lost my money he felt pity he was ready to help me he told me that my boyfriend will come back to me and he will be with me forever so i did not trust him when he was telling me, all i thought was that he want to also scam me and collect my money but i just give him a try and it was my last bus stop, i do all the necessary thing he told me to do after then i ask when is he coming back he said i should just relays and wait so i do but i was very panicky in 24 hours time he called me on phone and was begging me to let her come back i accepted her immediately because i love him so much, what would i have done if not for this man, he have prove that not all the spell caster are scam and Haox, he is a real man, so that is how i got my ex boyfriend back.
Am telling you all out their if there is anybody who can help you is no other person than Priest Korofo his email address is (greatkorofosolutionhome@gmail.com) or you can simply contact him through his website on http://greatkorofosolutionhome.webs.com he have help so many people i have benefit from it myself and this is the time you will also benefit from him know matter what the problem is and if you are contacting him, tell him your problems and he we be ready to help you.

Thank you so much Priest Korofo.

March 13 2014 at 12:35 PM Report abuse rate up rate down Reply
Bradley Speck

HOW I GOT MY EX BOYFRIEND BACK...
I had a problem with my boyfriend six months ago,which lead to us apart.
When he broke up with me,I was no longer myself,I fill so empty inside
sorry.Until a friend of mine told me about one of her spells that helped in
same problem too. i email the spells and I told him my problem
and I did what he asked me to briefly make. the long story Before I knew it
what happened,not 48 hours,my friend gave me a call and he
come back to me and told me he was sorry about what was going to happen, I'm so
grateful to these spells and will not stop publishing his name on the internet
just for the good work he has doing.If you need his help,you can email him at
(UNIQUELOVESPELLCENTER@YAHOO.COM)and he will also help you to Dr.TRUST(
UNIQUELOVESPELLCENTER@YAHOO.COM) I will be forever grateful to you.

March 12 2014 at 8:35 PM Report abuse rate up rate down Reply
Olivia Ken

My husband has abandon me and the kids for the the past 8months now, and refuse to come back because he was hold on by a woman whom he just met, for that, my self and the kids has been suffering and it has been heel of a struggle, but I decide to do all means to make sure that my family come together as it use to, then I went online there I saw so many good talk about this spell caster whose email is (dr.okogbolovespell@gmail.com) so I had to contact him and explain my problem to him and in just 3days as he has promised, my husband came home and his behavior was back to the man i got married to. I cant thank the spell caster enough for what he did for me, i am so grateful and i will never stop to publish his name on the internet for the good work he has done for me,once again his email is (dr.okogbolovespell@gmail.com)

March 12 2014 at 6:37 PM Report abuse rate up rate down Reply
Monica Nick

hello everyone i am proud to testify of the good work of the Priest who helped me got my lover back in less than 3 days. I was happily married to the best Man in the world but suddenly after 6 years of our marriage my husband started behaving strange everything changed he didn't care about me and the kids anymore he was nagging every night and day and later told me he wanted us to separate and that's how he left. seriously i cried for a long time and one day i was going through the internet i saw a testimony of this great Priest i wasn't interested at first but i decided to give it a try and that's how he helped me and i got my husband back begging to have me it was like a dream but its real we are still together till date.Anywhere you are Priest Andrew, thanks for you are the best.For you out there if you are passing through any difficulty in your marriage, please contact him on his email priestandrew91@yahoo.com, he is still capable of solving other issues and he has helped most of my friends over here in New york. once again his email is priestandrew91@yahoo.com his spell is for better life.

March 06 2014 at 1:16 AM Report abuse rate up rate down Reply
Jose Patrich

My name is Clifford from Canada, I have great joy in me as i am writing this testimony about the great man called Dr.OLUBAM. When my lover left me i never taught that i will be able to get her back after all she has put me through, But i am so happy that after the interference of Dr.Ekpiku i was able to get my lover back after 48hours and i can proudly that who ever need help in getting there lover back should contact Dr.OLUBAM on these contact details below DR.OLUBAMSPELLHOME@GMAIL.COM AND DR.OLUBAMSPELLHOME@LIVE.COM for proper understanding of what i have just witness.

February 28 2014 at 6:54 PM Report abuse rate up rate down Reply
Jose Patrich

I am Elizabeth Taylor from UK. I never believed in love spells or magic until i met this spell caster once when i went to Africa in may this year on a business summit. I meant a man who’s name is Dr. OLUBAM (DR.OLUBAMSPELLHOME@GMAIL.COM AND DR.OLUBAMSPELLHOME@LIVE.COM) he is really powerful and could help cast spells to bring back one’s gone, lost, misbehaving lover and magic money spell or spell for a good job or luck spell .I’m now happy & a living testimony cos the man i had wanted to marry left me 3 weeks before our wedding and my life was upside down cos our relationship has been on for 4years. I really loved him, but his family was against us and he had no good paying job. So when i met this spell caster, i told Dr .Ekpiku what happened and explained the situation of things to him. At first i was undecided, skeptical and doubtful, but i just gave it a try. And in 8 days when i returned to UK, my boyfriend (now husband) called me by himself and came to me apologizing that everything had been settled with his mom and family and he got a new job interview so we should get married. I didn’t believe it cos the spell caster only asked for my name and my boyfriends name and all i wanted him to do. Well we are happily married now and we are expecting our little kid, and my husband also got the new job and our lives became much better. His email is DR.OLUBAMSPELLHOME@GMAIL.COM

February 28 2014 at 6:53 PM Report abuse rate up rate down Reply