By Stacey L. Bradford
Associate Editor, SmartMoney.com


GETTING DIVORCED CAN be a daunting experience. After all, you're not only breaking up with your spouse, but you're also carving up your assets and the time you spend with your children (if you have them). With so much emotional and logistical baggage to deal with, the entire process can be lengthy and expensive. However, with just a little planning, you can avoid some of the most common -- and costly -- pitfalls that divorcing couples experience.

Here are the top five mistakes you should avoid when splitting with your husband or wife.

1. Being Unprepared

Always keep in mind that divorce attorneys charge by the hour. In some major cities, those rates can climb as high as $200 to $300 an hour. That's all the more reason why it's important to do as much of your own legwork as possible. For example, in order to start splitting up you and your spouse's assets, your lawyer will need copies of all your financial and legal documents, including tax returns, bank statements and a list of your outstanding debt. By gathering and organizing the paperwork on your own, you can easily save several hundred dollars, says Daniel Clement, a New York-based divorce attorney. Leave the paper chase to your attorney, and you're basically paying him to compile what's sitting in your mailbox, he says.

2. Not Seeking Financial Advice

All too often, divorcing couples just split their assets down the middle, says Michael Goodman, a certified financial planner with WealthStream Advisors. That's not a smart move. You need to take into account the immediate and long-term tax ramifications of your belongings and figure out exactly how much they're really worth after taxes, he says. That's why seeking financial advice from an accountant or a financial planner is crucial. They can explain how much your 401(k) and regular brokerage accounts are worth today and what they'll be worth tomorrow after Uncle Sam takes his share. Ultimately, this information will help you negotiate a fair settlement. (Click here for more on taxes and divorce or use our property settlement calculator to help you figure out how much your assets are worth after taxes).

If your spouse owns his or her own business, it's a good idea to hire a business appraiser to estimate the value, says Alan Feigenbaum, author of "The Complete Guide to Protecting Your Financial Security When Getting a Divorce." Otherwise, he says, your spouse could underestimate the firm's worth and walk away with more than his fair share.

3. Asking for the House

One of the most common divorce mistakes women make is fighting for the home. Beyond the overwhelming task of finding a new place to live and packing up the house, they can quite understandably feel that the divorce will only be made tougher on the kids if they're uprooted. The problem is that a house carries tremendous expenses. All too often, the wife has to give up so much in the divorce settlement in order to keep the house that she doesn't end up with the cash flow to maintain it, says WealthStream Advisors' Goodman.

A better plan is for the couple to sell the house while they're still married and split the proceeds, says Goodman. Not only will this provide both spouses with more liquid assets, it also allows them to take a tax-free capital gain of $500,000 on the sale. If the wife keeps the home and is later forced to sell it after the divorce, she's only allowed a $250,000 tax-free gain.

See our story for more on taxes and selling a home.

4. Rushing to Court

The fastest way to run up those hourly attorney fees is to go to court. While a regular divorce costs around $8,000, one that goes to trial can easily run upwards of $20,000, says Emily Doskow, author of "Nolo's Essential Guide to Divorce." Unless you have a very complicated divorce, the vast majority of couples are better off reaching a settlement through their lawyers.

Divorce mediation, in which a neutral third party helps a couple negotiate an agreement, is an even cheaper alternative for folks who can still bare to sit at the same table. Doskow estimates it costs about half as much as a contested divorce. But the expense isn't the only reason she's a proponent. "I like mediation because it keeps the decision making with the people who are most invested in it," she says.

Read our story to learn more about these collaborative divorces.

5. Failing to Untangle Your Assets

When you're going through a divorce, you want to be financially independent as soon as possible, says New York divorce attorney Clement. Independence starts with establishing your own credit and opening up your own credit card before you get divorced. Why the rush? If the divorce starts to get ugly, your spouse could run up high balances and not make the payments just to hurt your credit score, warns Craig Watts, a spokesman for Fair Isaac. But if you have your own card, you'll at least have a healthy account to use as your anchor to build up your credit sore. (Click here to read about the other ramifications of keeping credit histories intertwined post-divorce).

Another mistake is to not pay off all of your marital obligations. "You want to get all of the debts paid off as part of the marital settlement ... even if it means liquidating an asset you didn't want to liquidate, such as the house," says Feigenbaum. Otherwise your spouse could fail to honor debts he or she agreed to take on during the divorce settlement, and you could end up with creditors after you for payment.

Read our story for more information on how to navigate a divorce as painlessly as possible.

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