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 »

Introduction to Retirement Funds

Target date funds help you maintain a long term portfolio.

View Course »

Add a Comment

*0 / 3000 Character Maximum

118 Comments

Filter by:
Sue Preedy

Hi I am SUE PREEDY from London I got a love spell done on my fiance actually he left me after one year of engagement I was shocked when he told me he does not love me any more he is going to marry with another girl it was very difficult to believe because we were in love from last 5 years he was the guy who never thought to live without me for a second he used to give thousands of phone calls in a day and he was saying to me he does not love me any more, it was a worse news for my family because I gave a very good treat to my friends and raletive on my engagement and we put engagement ring to each other in front of hundreds of people now if he didn't marry me so it was shame for me in my society so I decided that I will get him back any how, than I found Dr.Trust on Internet I told him my problem he told me not to worry I will fetch him back to you he said that he will come himself and will beg me.he gave me 48 hours time and of course it happened before 48 hours he come back to me and said he is sorry for what he did to me,that he is ready to marry me. we get married and we are happy now as husband and wife. really Dr.Trust is a Miracle Man. contact him for your own help ultimatespellcast@gmail.com or ultimatespellcast@yahoo.com call me +2348156885231

Sunday at 3:27 AM Report abuse rate up rate down Reply
Morrison Penn

GREETINGS……………….My name is MORRISON PENN i live in UK and i got married to MARK PENN after nine years,he broke up with me because of his mistress , I did everything possible to bring him back but all was in vain, I wanted him back so much because of the love I have for him, I begged him with everything i have, I made promises but he refused. I explained my problem to a female friend and she suggested that I should contact a spell caster that could help me cast a spell to bring him back but I am the type that don’t believed in spell, I had no choice than to try it,then I meant a spell caster called DR JADE and I email him, and he told me there was no problem that everything will be okay before 48 hours , that my husband will return to me , he cast the spell and surprisingly in the second day, it was around 4pm. My husband called me, I was so surprised, I answered the call and all he said was that he was so sorry for everything that happened, that he wanted me to return to him, that he loves me so much. I was so happy and went to him, that was how we started living together happily again. Since then, I have made promise that anybody I know that have a relationship problem or any family problem, I would be of help to such person by referring him or her to the only real and powerful spell caster who helped me with my own problem and who is different from all other spell casters. Anybody who need the help of this spell caster DR JADE contact him through his email now at:( drjadespiritualtemple@hotmail.com) he can help you he is very powerful and good at all type of spell work you need him to do for you and your problem will be over as main now

March 27 2015 at 6:44 PM Report abuse rate up rate down Reply
Johnson Sander

SANDER From United Kingdom. I wish to share my testimonies with the general public about what this man called dr oboite 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 this man called Steven we were together for a long time and we loved our self’s 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 told me about this man and gave his contact email,doctorogul@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 he still help me 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 ogul for what you have done for me, if you are out there passing any problems you can Email him :: doctorogul@gmail.com

March 20 2015 at 5:46 PM Report abuse rate up rate down Reply
Luaren Fisher

Hey if you relationship with your boyfriend or husband or wife is at its breaking point and you still in love and can let go because they are all you need my advice to you is to contact Meto Acamu. He is a very powerful witch

doctor that can help you. He basically help repair life problem of any sort use this to contact him metodoacamufortressx@yahoo.com testimony about how he helped a whole lot of people are ever were on the internet

March 18 2015 at 5:38 PM Report abuse rate up rate down Reply
Benny Michealz

So much happy that my ex wife that left me for the past 3month is back home since i contacted Dr. Ikhine for help through his email which is agbadado@gmail.com or you can call him on +2347060552255 for fast response to solve your problem

March 18 2015 at 9:32 AM Report abuse rate up rate down Reply
expertspellcaster

This is my testimony about the good work of a man who helped me..My name is Tracy Adams, and I base in Canada. My life is back! After 2 years of marriage, my husband left me with our three kids. I felt like my life was about to end, and was falling apart. Thanks to a spell caster called Dr shifu who I met online. On one faithful day, as I was browsing through the internet, I was searching for a good spell caster that can solve my problems. I came across series of testimonies about this particular spell caster. Some people testified that he brought their Ex lover back, some testified that he restores womb, some testified that he can cast a spell to stop divorce and so on. There was one particular testimony I saw, it was about a woman called grace, she testified about how Dr shifu brought back her Ex lover in less than 72 hours and at the end of her testimony she gave Dr shifu e-mail address. After reading all these, I decided to give Dr shifu a try. I contacted him with his via email address and explained my problem to him. In just 2 days, my husband came back to me. We solved our issues, and we are even happier than before. Dr shifu is really a talented and gifted man and I will not to stop publishing him because he is a wonderful Dr...If you have a problem and you are looking for a real and genuine spell caster to solve that problem for you. Try Dr shifu today, he might be the answer to your problem. Here's his contact: templeofmiracles@yahoo.com Thank you once again Dr shifu. Contact him for the following:

(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)If you want to stop your Divorce.
10)Help bringing people out of prison.
(11)Marriage Spells
(12)Miracle Spells
(13)Beauty Spells
(14)PROPHECY CHARM
(15)Attraction Spells
(16)Evil Eye Spells.
(17)Kissing Spell
(18)Remove Sickness Spells.
(19)ELECTION WINNING SPELLS.
(20)SUCCESS IN EXAMS SPELLS.
(21) Charm to get who to love you.
Contact him today on: templeofmiracles@yahoo.com.

templeofmiracles@yahoo.com or add this number on whatsapp +2348147863980
·

March 18 2015 at 12:10 AM Report abuse rate up rate down Reply
Johnson Joy

GREETINGS...................My name is JOHNSON JOY i from UK and i got married to HENRY KELVIN after six years in marriage ,he broke up with me, I did everything possible to bring him back but all was in vain, I wanted him back so much because of the love I have for him, I begged him with everything, I made promises but he refused. I explained my problem to a female friend and she suggested that I should contact a spell caster that could help me cast a spell to bring him back but I am the type that don't believed in spell, I had no choice than to try it, I meant a spell caster called DR IMONAH and I email him, and he told me there was no problem that everything will be okay before tow days, that my husband will return to me before three days, he cast the spell and surprisingly in the second day, it was around 4pm. My husband called me, I was so surprised, I answered the call and all he said was that he was so sorry for everything that happened, that he wanted me to return to him, that he loves me so much. I was so happy and went to him, that was how we started living together happily again. Since then, I have made promise that anybody I know that have a relationship problem, I would be of help to such person by referring him or her to the only real and powerful spell caster who helped me with my own problem and who is different from all other spell casters. Anybody who need the help of this spell caster DR IMONAH contact him through his email today at:(drimonahspiritualtemple@gmail.com) he can help you he is powerful and good at all type of spell work you need him to do for you and your problem will be over as my now

March 10 2015 at 3:06 AM Report abuse rate up rate down Reply
Tessy Cole

My name is Tessy Cole from Finland, My boyfriend left me a month ago and he was leaving with another woman who is 5 years older than him, i felt like my life is completely over so one day as i was browsing searching on the internet for help I read over the internet how a spell caster who has help several people to get there love back. I have been depress for the past one month and what i needed is to get him back and live with him happily. So, i decided to give it a try so i contacted the spell caster called DR. EBAKOR and i explained my problems to him and he said he will cast a love spell for me that will bring him back forever. I had no choice but to inform DR. EBAKOR to cast the spell which i use to get my boyfriend back and now my life is complete and both of us are very happy with the relationship. And i am really grateful to this man for what he has done for me and my family, Thank you very much and i will continue to say and share my testimony over and over again. For those who need help or that are having the same problem or other wise as me should contact him on his email address; DOCTOREBAKORSPELLTEMPLE@HOTMAIL.COM

You can also reach him on his cell phone: +2348073604190

March 08 2015 at 10:42 PM Report abuse rate up rate down Reply
mariacooker

This is my testimony about the good work of a man who helped me....My name is maria cooker ... My life is back!!! After 8 years of marriage, my husband left me and left me with our three kids. I felt like my life was about to end, and was falling apart. Thanks to a spell caster called papa ork who i met online. On one faithful day, as I was browsing through the internet, I was searching for a good spell caster that can solve my problems. I came across series of testimonies about this particular spell caster. Some people testified that he brought their Ex lover back, some testified that he restores womb, some testified that he can cast a spell to stop divorce and so on. There was one particular testimony I saw, it was about a woman called grace,she testified about how papa ork brought back her Ex lover in less than 72 hours and at the end of her testimony she drop papa ork e-mail address. After reading all these,I decided to give papa a try. I contacted him via email and explained my problem to him. In just 3 days, my husband came back to me. We solved our issues, and we are even happier than before. papa ork is really a talented and gifted man and i will not to stop publishing him because he is a wonderful man...If you have a problem and you are looking for a real and genuine spell caster to solve that problem for you. Try the great papa ork today, he might be the answer to your problem. Here's his contact: orkstarspell@gmail.com Thank you great ork. Contact him for the following:

(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
10)Help bringing people out of prison
Contact him today on:
orkstarspell@gmail.com

March 08 2015 at 5:03 AM Report abuse rate up rate down Reply
Buckner Rebecca

I must confess that over here in the United Kingdom it is very difficult to get a powerful spell caster that will be able to restore broken marriages or relationships, But through the help of the internet i was able to get in touch with this powerful spell caster called Dr.Adodo after reading a lot of good reviews about him on the internet so i contact him through these details via email: Adodospelltemple@gmail.com or +2348156784928 And after i told him about my relationship stress then Dr.Adodo told me to calm down that my lover will come back to apologies to for leaving me, I never taught that this was going to be possible, Just within 48 hours that i contacted Dr.Adodo my lover sent me and a sms text saying that i should forgive him and before i knew it he was already at my place begging me to accept him back. you can contact him on Adodospelltemple@gmail.com or call his mobile number
+2348156784928 WEB http://adodospelltemple.wix.com/adodospelltemple

March 08 2015 at 3:24 AM Report abuse rate up rate down Reply