In this article, you can learn…
- Which financial assumptions to let go of during divorce.
- How to financially prepare for the future during a divorce.
- How to avoid costly mistakes with your 401k.
What Are The Most Common Financial Mistakes To Avoid During Divorce?
Mistake #1: Many people assume that if they simply shift money into a sole account from a joint account, they won’t have to share or split that money. This is untrue. In the State of New York, your assets are divided presumptively, regardless of whose name is on an account or title. The same is true of investments and retirement savings.
If you’re counting income “solely as your paycheck,” think again. In the case of alimony payments and child support, you should also look at investment income and income from rental properties, if applicable. Once that added income is put into a sole account and you file taxes separately from a spouse, this now counts as income your spouse may be entitled to, even if the rental property is jointly shared.
Mistake #2: Another common financial mistake is to keep earning as much as you can, working overtime, and raking in bonuses at work, even when you sense a divorce is on the horizon. While you may be doing this in hopes of having enough saved up to get by after the marriage is over, what you’re really doing is earning more for the other party to take a share of.
Attorney David Bliven is a knowledgeable lawyer who has been serving New York for over 20 years. He’s helped clients just like you to protect their wealth as they navigate a divorce and avoid costly financial missteps along the way.
Have questions about the monetary aspects of a divorce? Want the strongest financial advice possible? Contact The Law Offices Of David Bliven today to set up your initial consultation!
The same can often be said for bonuses earned after a divorce case is filed. While some performance-based bonuses may be exempt, your bonuses are often considered marital property – along with a percentage accrued to your income. Thus, 50% of your bonus for that given year (even those earned after filing for a divorce) can still be awarded to a spouse during proceedings.
Mistake #3: The same holds true for 401k accounts. If you’re contributing to a 401k account even after a divorce is filed, you’re piling up money that a spouse can later claim half of. It’s wisest to set up a frozen “marital” account to keep these assets separate and segregate out post-filing contributions to your 401k.
Dividing out passive appreciation or the interest from a 401k can get complicated. Similarly, distinguishing interest from a separate property or post commencement portion of your 401k can be difficult. Often, the distinction isn’t made, and your spouse could walk away with more than they really should.
What can you do to protect yourself in this situation? Meet with an accountant or a financial planner with a background in the financial aspects of divorce cases. Get the right kind of advice so you get the best input on how to handle your assets carefully and wisely, both before and after a divorce case is filed.
For more information on Financial Mistakes To Avoid During Divorce, an initial consultation is your next best step. Get the information and legal answers you need by calling (914) 362-3080 today.
Attorney David Bliven is a knowledgeable lawyer who has been serving New York for over 20 years. He’s helped clients just like you to protect their wealth as they navigate a divorce and avoid costly financial missteps along the way.
Have questions about the monetary aspects of a divorce? Want the strongest financial advice possible? Contact The Law Offices Of David Bliven today to set up your initial consultation!
