Divorce is inherently expensive, even if you get free divorce advice, minimize your legal costs and amicably agree upon all terms of the divorce. There are multiple financial mistakes that people make during a divorce (or legal separation) which can damage their finances for many years to come. Download your free E-book to avoid these common divorce mistakes.
Download your free E-book here: Expensive Divorce Financial Mistakes
Topics covered in the E-book include:
Divorce Tax Questions
Many divorce tax questions arise as you are negotiating your divorce settlement, For example, beware when trading between categories of assets, as some may be post-tax (such as a Roth IRA or equity in a home) while others may be pre-tax (such as a 401k or stocks), and therefore not equal dollar for dollar in a settlement proposal. To compare relative values, you need to take into account both the tax impacts and the expenses required for turning the investment into cash.
Capital Gains Tax on Sale of Home After Divorce
Depending on how you establish the terms of a buyout or division of the marital home, and the degree to which your home has increased in value, you may be exposing yourself to a large capital gains tax upon selling the home. If you can imagine selling the home at some point in your life, you may be the solely responsible for this tax burden. Any settlement agreement should take into account your capital gains tax on the sale of home after divorce.
Cash Out 401k Before Divorce?
You may be considering a cash out of your 401k before divorce or immediately following a divorce. If done correctly, the spouse receiving a divided retirement account can avoid the 10% penalty tax from cashing out some or all of the portion they receive. Be careful though, as they will be taxed on their distribution as income, which may even place them in a higher tax bracket.
Unnecessary Divorce Process Costs
Depending on what process you use, and how you approach your divorce settlement negotiation, you may be paying 2 to 10 times more than is necessary. Read about best practices for minimizing the costs of your divorce process.
Things Often Overlooked in Divorce Agreements
Whether it is protecting your credit, accounting for hidden or undervalued assets, or figuring out who claims a child on taxes with 50/50 custody, there are many things often overlooked in divorce agreements which can have expensive consequences for years to come.