5 Common Financial Mistakes to Avoid in a Connecticut Divorce
When marriage ends in divorce, it is draining. If you have significant assets, dividing the wealth can become contentious. It is important to understand the top financial mistakes to avoid in divorce.
Avoiding common financial mistakes made during divorce can help minimize the stress burden. Obtaining professional financial advice from an experienced Connecticut divorce lawyer is critical.
For immediate assistance, please call (860) 561-0651 or send us an online message today.
1. Failing to Understand Your Assets and Debt
In Connecticut, all property owned by spouses at the time of the divorce is subject to division. Entering divorce without knowing the full extent of the marital finances is one of the top money mistakes to avoid in divorce. Understanding your total financial picture is key.
To avoid this mistake, equip yourself. Become knowledgeable of all marital assets and debt.
Take stock of all data relating to your finances and asset classes. Collect official documentation as soon as possible. This includes tax returns, reports, business valuations, and statements for all accounts. This way you can inventory marital assets and liabilities. This is especially true if your spouse handled most financial decisions. Failure to do so will give your spouse an unfair advantage during settlement.
StangerLaw LLC can help you identify all assets in a high-asset divorce.
2. Underestimating Personal Expenses
Divorcing spouses often underestimate living expenses when producing the initial budget. But they later discover it fails to cover all expenses. Take time to track all your expenses and develop a realistic budget.
A spousal support (alimony) calculation takes your monthly budget into consideration. The budget should align with your current standard of living but also factor in future expenses.
3. Ignoring Hidden Costs
Evaluating each asset or income source in isolation makes it easy to miss hidden costs. Considerations such as taxes, capital gains, investment losses, timing issues, and inflation go unexamined. Look at the comprehensive picture. This allows you to analyze the interaction of the assets and their true value over time. Get a team.
Advisors, including a tax professional, financial advisor, and even a business valuation expert, can thoroughly assess any proposed property division. We routinely work with high-net-worth individuals to analyze proposed financial settlements. We can help you obtain expert evaluations of your assets that take into account all the hidden costs that can affect their value.
4. Assuming Equal Division of Property Is Fair
One of the top money mistakes to avoid in divorce relates to the equitable distribution of marital property. Property distribution in a Connecticut divorce will not necessarily be equal. An asset’s value is not defined by its current market value.
For any asset, compare the value of the tax basis, present value, and transaction costs. Consider maintenance costs and other expenses. Don’t simply agree that each spouse will receive property of equal monetary value. Make sure each spouse will receive a truly appropriate share of the assets over time.
Often one spouse will be awarded ownership of all or a different percentage of one asset, with the other getting cash or another asset of offsetting value.
Finally, ask us about Double Dipping. If an owner is to pay alimony based on the income from a business or other asset, the value of that asset or business may have to be adjusted when dividing the ownership of the assets between the spouses.
5. Counterproductive Disputes
When knowledgeable counsel represents each spouse, the lawyers zealously protect their client’s interests. It is important to protect your financial interests and legal rights. But excessive fighting can be counterproductive.
Even if you have the financial means to continue, pick your battles. Extended disputes can be costly and bring unnecessary conflict. In the end, they diminish assets available at the time of equitable distribution.
Hire a West Hartford, CT High-Net-Worth Divorce Lawyer
Trust StangerLaw LLC as your experienced guide in your Connecticut high-asset or high-net-worth divorce. We have been providing effective legal solutions for clients since 1977, so we are well-versed in the complex issues and exotic asset classes in a high-net-worth divorce.
Contact our firm online or call (860) 561-0651 today to schedule your consultation.