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.

Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

How to Avoid Financial Scams

Avoid getting duped by financial scams.

View Course »

Add a Comment

*0 / 3000 Character Maximum

76 Comments

Filter by:
Stacey Bush

I wish to share my testimonies with the general public about what this man called Dr.Kala has just done for me , this man has just brought back my lost Ex husband to me with his great spell, i was married to my husband we were together for a long time and we loved ourself but when i was unable to give him a child for 2 years he left me and told me he can’t continue anymore then i was now looking for ways to get him back until a friend of mine tell me about this man called Dr Kala and give me his contact email (kalalovespell@gmail.com) then you won't believe this when i contacted this man on my problems he prepared this spell cast and bring my lost husband back, and after a month i miss my month and go for a test and the result stated am pregnant am happy today am a mother of a baby girl, thank you once again the great Dr.Kala for what you have done for me, if you are out there passing through this same kind of problems you can contact him today on his mail kalalovespell@gmail.com OR call his cell phone on +2347051705853

11 hours ago Report abuse rate up rate down Reply
Maria A Thompson

Hello everyone i want to share a live testimony on how Dr Alex was able to bring my husband back to me, myself and my husband were on a serious breakup, even before then we were always quarreling fighting and doing different ungodly act..
My husband packed his things out of the house and we had to live in different area, despite all this i was looking for a way to re_unite with my husband, not until i met Dr Alex the great spell caster who was able to bring my husband back home, Dr Alex cast a love spell for me, and after some time i started seen results about the spell....
Today my family is back again and we are happy living fine and healthy, with Dr Alex all my dream came through in re_uniting my marriage, friends in case you need the help of Dr Alex kindly mail him on( solutionhelpcentre@gmail.com ) or his website (http://solutionhelpcentre.webs.com) or call him on +2347036013351, Sir i will forever recommend you!!!

July 09 2014 at 5:54 PM Report abuse rate up rate down Reply
conor brown

Am here on this site to tell the whole world about my experience with the great man be hide the success of my relationship whose name is Dr zizi. My relationship was in a big problem 3 months (91 days) ago, It took the assistance of Dr zizi before i could get my lover back. So i concluded to let the world know about Dr zizi and his powers. Well the contact details of Dr zizi are: drzizi@gmail.com or give him a call on +2348101814609. Through his help you will get your lover back just within 48 hours

CONOR BROWM
FLORIDA

July 09 2014 at 1:07 PM Report abuse rate up rate down Reply
Frank Silver

HELLO i have read testimonies about this great spell caster called Dr. Ekpiku how he helped people to bring their lover back. so i decide to give him a try, i am here today to give my own testimony on how this great man brought my ex back within 48 hours for just to contact him. this girl has broke up with me over 6 weeks but she came back just within 48 hours that Dr Ekpiku said he will make her come back to me. just contact this man and he will bring your ex back here is his email address mail. Ekpikuspelltemple@live.com

June 25 2014 at 11:34 PM Report abuse rate up rate down Reply
Frank Marian Frank M

Great Thanks to Dr Ofemo for helping me when i needed help.
My name is frank Marian from USA I never
believe in love spells until I experience Dr.
DR Ofemo temple, and after he cast a love spell for me
my Ex called me to apologize for the pain that she has
caused me and till today we are living a happy family,
if you need a right place to solve your problems
contact DR Ofemospelltemple@gmail.com is the right choice. he is a great man that have been casting spells with years of experience, he cast spells for different purposes like:

(1)If you want your ex back.
(2) if you always have bad dreams.
(3)You want to be promoted in your office.
(4)You want women/ men to run after you.
(5)If you want a child.
(6)[You want to be rich.
(7)You want to tie your husband/wife to be yours
forever.
(8)If you need financial assistance.
(9)Herbal care

Contact him today on: drofemospelltemple@gmail.com or you can contact him through his website on http://drofemospelltemple.webs.com/

June 24 2014 at 4:33 AM Report abuse rate up rate down Reply
Bianca Sparks

I stumbled on this email address robinsonbuckler@yahoo.com few days ago, so i emailed him about my bad relationship condition, how my lover left me, how he was with another girl, so Mr Robinson told me it would take 3days to get my boyfriend back, i waited for 3 days, and wow!!!!!!!!!, unbelievable my boyfriend came to my house asking me if we could try things out again. He broke up with the other girl and we rekindled and got back together, he now show me care and attention. Mr Robinson was my last hope, my last chance after all the spell casters I tried before, Mr Robinson kept his promise! he is the greatest spell caster on the internet, call Mr Robinson +19715126745 for help
Bianca Sparks

June 15 2014 at 1:38 PM Report abuse rate up rate down Reply
Eddy Lanky

Hello i am Sandra ,I am out here to spread this good news to the entire world on how i got my husband back.I was going crazy mad and confuse when my husband left me for another girl last month,But when i meet a friend that introduce me to DR WISDOM the great messenger to the oracle that he serve,I narrated my problem to DR WISDOM about how my ex love left me and also how i needed to get a job in a very big company.He only said to me that i have come to the right place were i will be getting my heart desire without any side effect.He told me what i need to do,After it was been done,In the next 2 days,My love called me on the phone and was saying sorry for living me before now and also in the next one week after my lovely husband called me to be pleading for forgiveness,I was called for interview in my desired company were i needed to work as the managing director..I am so happy and overwhelmed that i have to tell this to the entire world to contact DR WISDOM at the following email address and get all your problem solve..No problem is too big for him to solve..Contact him direct on:giftedspellcaster@outlook.com

and get your problems solve like me

June 14 2014 at 6:17 PM Report abuse rate up rate down Reply
Sophia Andres

Hello I am Sophia Andres, I am out here to spreed this good news to the entire world on how I got my ex love back.I was going crazy when my love left me for another girl last month, But when i met the website of Dr Ikuku
http://ultimatesolutioncenter.webs.com the great messenger to the oracle how my ex love left me and also how i needed to that he serve,I narrated my problem to Dr Ikuku about a job in a very big company.He only said to me that i have come to the right place were i will be getting my heart desire without any side effect.He told me what i need to do,After it was been done,In the next 12 hours,My love called me on the phone and was saying sorry for living me before now and also in the next one week after my love called me to be pleading for forgiveness,I was called for an interview in my desired company were i needed to work as the managing director..I am so happy and overwhelmed that i have to tell this to the entire world to contact Dr Ikuku at the following email address and get all your problem solve..No problem is too big for him to solve..Contact him direct on: ultimatesolutioncenter@gmail.com or call him on +2348104181322 and get your problems solved like me..... ONCE AGAIN HIS EMAIL ADDRESS IS: ultimatesolutioncenter@gmail.com or contact him through his website at http://ultimatesolutioncenter.webs.com. he is real and very powerful to help.
Dr Ikuku Mobile Number: +2348104181322
Email: ultimatesolutioncenter@gmail.com

June 08 2014 at 5:49 AM Report abuse rate up rate down Reply
Sophia Andres

Hello I am Sophia Andres, I am out here to spreed this good news to the entire world on how I got my ex love back.I was going crazy when my love left me for another girl last month, But when i met the website of Dr Ikuku
http://ultimatesolutioncenter.webs.com the great messenger to the oraclet how my ex love left me and also how i needed to that he serve,I narrated my problem to Dr Ikuku about a job in a very big company.He only said to me that i have come to the right place were i will be getting my heart desire without any side effect.He told me what i need to do,After it was been done,In the next 12 hours,My love called me on the phone and was saying sorry for living me before now and also in the next one week after my love called me to be pleading for forgiveness,I was called for an interview in my desired company were i needed to work as the managing director..I am so happy and overwhelmed that i have to tell this to the entire world to contact Dr Ikuku at the following email address and get all your problem solve..No problem is too big for him to solve..Contact him direct on: ultimatesolutioncenter@gmail.com or call him on +2348104181322 and get your problems solved like me..... ONCE AGAIN HIS EMAIL ADDRESS IS: ultimatesolutioncenter@gmail.com or contact him through his website at http://ultimatesolutioncenter.webs.com. he is real and very powerful to help.

June 05 2014 at 4:24 AM Report abuse rate up rate down Reply
Onika Gomes

I am Onika from U.K I want to give great appreciation to the great man named prophet Abayotor who helped me in getting back my love who left me for 3years within 48hours, after been scammed by some fake spell casters which made away with my money. i was watching my television when i saw a woman giving thanks to this great man for what he has done for her, although i have been scammed by so many spell casters but i still decided to contact him.I told him everything that happened and he just laughed over it and told me that my love will be back within the next 24hours at first i was full of doubt until the next 48 hours i had a call by unknown number i did not even think if he would be my love the next thing i could hear on the phone was my love pleading and begging me to forgive him and he promised not to hurt me till the rest of his life. I was so surprised and at the same time i was filled with joy and happiness, i did not waste anytime in accepting him because that was what i have been looking for, after calling, in the next 2hours time he came to my house and still pleading and begging me to forgive him the must surprising thing was that he gave me access to his account and everything that he have, for me to know that he is not going to leave me for any reason. Now we are living happily than ever before. So i want to use this opportunity to let the world to know that there are people in this world sent from God to help people to get back there husband e.g people like Prophet Abayotor, sir you are a great man. In case you want to thank him for me or you need his help you can contact him through his private mail: ajamugashrine@gmail.com or ajamugashrine@yahoo.co.uk. Once again thank you very much sir.

April 26 2014 at 4:29 PM Report abuse rate up rate down Reply