Some people cope with divorce by splurging on a sexy new sports car. Others take an extended vacation. But an experienced divorce lawyer for women that is an expert in Family law Townsville will advise against such acts and tell you to instead do some careful planning. Divorce is a time of new possibilities – possibilities that will come to fruition only if you plan accordingly. With that in mind, you need to know those mistakes to avoid and how to proactively plan for your future.
Ask a Divorce Lawyer for Women: 6 Mistakes to Avoid in a Divorce
1. Forgetting to Update a Will and Other Crucial Documents
Divorce can be messy and traumatizing, but you must update the person listed as the executor and trustee of your will. It’s equally important to ensure your assets are distributed appropriately. If your ex was named in your will, you’ll likely want to remove them altogether.
While you’re tending to these important matters, consider guardianship of your children if something happens to you and align your 401K and IRA beneficiary designations so they reflect your divorce terms. We additionally recommend that you:
- Establish a trust for minor children
- Review and update your life insurance policies
- Change your power of attorney
- Update your health proxy
2. Misunderstanding Social Security Benefits
Few understand, much less consider, the Social Security benefits they’ll receive once eligible. But these benefits serve as significant resources for most people and should be carefully considered during a divorce. This means understanding the benefits that may come from your own work history as well as those you might receive from your ex.
It’s best to consult with aggressive divorce lawyers for women in Atlanta, GA who understand the nuances of Social Security. In some cases, even the information provided by a Social Security Administration field office is not current. An independent legal team, however, can help you apply for all of the benefits to which you might be entitled.
3. Making Overly Conservative Investments
A divorce settlement usually splits investments evenly between both spouses. Each person must then identify the best investment approach for their respective futures.
Women, however, often take more guarded approaches to asset allocation. They want to preserve their nest eggs and, as a result, see very little portfolio growth. To safeguard your financial security, you’ll likely need an investment portfolio that grows at a rate faster than inflation. A financial advisor can look at your current financial situation and identify the right strategy to get you where you need to be.
4. Spending More Than You Can Afford
Marriage commonly provides a lifestyle made possible only by two incomes. After a divorce, it’s therefore natural that the economics for both spouses dramatically change. A separation means both partners transition from sharing resources and expenses to splitting both. Yet, even in the wake of these events, some women are reluctant to change their spending behaviors.
You can start this process by listing your current income and expenses. Then begin tracking how and where you spend “free” cash. Is it on clothing, take-out food, or other luxuries? Finally, look for ways to save money. Pack lunches, cancel unnecessary monthly subscriptions, and set aside at least a few dollars each week for an emergency fund. These steps can help you enjoy long-term financial stability.
5. Ignoring the Need to Return to Work
If you spent most of your marriage caring for your children and/or home, you may now need to return to the workforce. Some women ignore this fact and choose to stay home, where they feel both safe and comfortable. But choosing this option won’t keep a roof over your head or food on the table.
The point is that if your monthly expenses exceed your income, you will likely need to return to work. And doing so sooner rather than later can save you from falling into debt. Take the time needed to acquire new skills, update your resume, and find work that is both rewarding and lucrative.
6. Overlooking Tax Considerations
A skilled divorce lawyer for women will include potential tax debts in your settlement. This means acknowledging not all assets are alike. To illustrate, an investment account with $300,000 and a cost basis of $250,000 is not equal to a life insurance policy with a cash value of $300,000. Likewise, income generated by a rental property is not taxed in the same way as that from a pension.
It’s crucial you and your attorney examine all assets in your divorce settlement and value them accordingly. This ensures that you’re aware of any potential tax debt long before you receive a bill – and that assets are indeed divided fairly.
Divorce can drain your energy and emotions. It’s only natural that you try to avoid other exhausting topics, including social security benefits and updates to your will. But planning for the future now can provide peace of mind that will offset any sense of discomfort. Looking at tax implications, your household expenses, and your investment portfolio can also help you avoid common financial traps and enjoy a future full of possibilities.