A financial planner points out that the financial (and tax) warts in a divorce settlement may be quiescent until the passage of time and / or happening of certain events.
The article serves as a reminder of just some of the reasons that it may be worthwhile to have both a financial expert and a tax expert review any proposed settlement, in addition to your attorney. Each expert brings different knowledge, experience and perspective to a potential settlement.
Some common examples of financial / tax gotchas:
- Clinging to the marital home in all events, no matter the cost. While the emotions driving this decision are easy to understand, the math to justify the decision just may not compute right. By the time reason sets in, it may be too late to avoid / recoup losses / expenses.
- Impatience to “get it over with” trumps sound, prudent judgment. Example: Just walking away from clear legal entitlements. “I don’t need it.” Even when you – or you kids – do.
- Focusing on the upside and ignoring the downside. Transfers of assets to third parties often entail direct or indirect costs / expenses that may, at least to some degree, erode or offset the upside.
- Letting Negative Emotions Rule. There’s no way to instantly erase those feelings, especially where they were really earned. But letting them rule probably won’t really serve your best interests.
- Getting stuck on one tree and not seeing the whole forest that it is just one part of. You need the entire context to properly assess any component.
Read more in this USA Today article: 5 biggest divorce mistakes financially