5 Financial Mistakes to Avoid During NY Divorce
Sometimes the best decision that can be made in a relationship is to end it. If you and your spouse have decided to get a divorce, you will be faced with decisions that have the potential to affect your financial security. Here are five common financial mistakes made during divorce, and how to avoid them.
- Ignoring or underestimating your expenses: Many Americans do not keep a monthly budget, which can be costly during a divorce. Without a budget, you may end up underestimating the amount of money you need to be able to maintain your quality of life. To avoid this, figure out how much you can afford to pay for expenses each month, and be sure to consider future inflation.
- Failing to consider long-term financial security: After you have created a budget that considers monthly income and expenses, as well as inflation, you must consider how much money you will need for retirement. As you are no longer married, you will not be able to rely on your spouse’s social security income in addition to your own. Consult a financial advisor to determine how much you should be saving for retirement.
- Failing to consider taxes: After a divorce is finalized, you may get taxed on the marital assets you received through your settlement. Taxes will affect the value of any property and assets you are receiving in the settlement, as well as the amount of support you will receive from or pay to your spouse. To avoid being surprised by a big tax bill after your divorce, make sure you understand the tax implications of your settlement.
- Not thinking about insurance: Many types of insurance can affect a divorce settlement, but the biggest culprits are health and life insurance. Life insurance is essential after divorce, especially if you are paying or receiving child support. If you are paying, life insurance ensures your children will continue to receive support if you die. On the other hand, if you are paying child support, make sure your spouse is covered by a life insurance plan, so you are not financially burdened if they die.
- Failing to establish a budget: As we mentioned above, many Americans do not make a budget, and even fewer follow one. Trying to settle a divorce without a budget is not just difficult, it is irresponsible and will have long-term effects on your financial stability. Before settling your divorce, sit down and consider your monthly income and expenses to better understand what you need to do to secure your financial future.
Consult a divorce attorney while you are planning for divorce
Navigating a divorce settlement can be a complex and lengthy process, especially if you and your spouse share bank accounts, property, and retirement accounts. Drawing on more than 30 years of experience in matrimonial and family law in New York City, our NYC matrimonial attorney at the Law Office of Vivian I. Stark, P.C. are prepared to advocate for you. If you are considering a divorce, call us at (212) 349-1600 or contact us online today.