If you’re going through a divorce, it’s essential to be proactive about keeping your finances in check, because if you don’t, there will be consequences. Unfortunately, many people end up with a smaller divorce settlement than expected because they either lived beyond their means or spent community funds on themselves that had to be reconciled when the divorce was finalized.
One BIG, common financial mistake people make during divorce and five ways it plays out
While spending money you shouldn’t be spending—or don’t have—is generally the most common financial mistake people make during divorce, there are several different ways this mistake can play out. You could compromise your divorce settlement if you:
1). Spend crazy amounts of money on yourself. There’s no question—going through divorce isn’t fun. It can leave you feeling angry, depressed and even put you in a state of grief. To compensate, many people opt for some good, old retail therapy, whether that means going on a shopping spree and maxing out the joint credit cards or buying a new sports car.
What these folks typically don’t realize is that the crazy money they spent on themselves may be deducted from their portion of the community estate when the divorce settlement is hashed out. The other party will need to file a reconstitution claim and present clear and convincing evidence that the monies were spent solely for the other party’s benefit, but that can be very easy to prove.
2). Spend lots of money on a new love interest. We get it. You’re lonely, and you need a little companionship, plus dating someone new might be a good way to get under your future ex’s skin. Along the way, you’re buying expensive gifts, cars and vacations for your new love and spending community funds to do so.
While a couple of dinners out likely won’t be an issue, extravagant expenditures on a new lover probably will. Again, look for your spouse to file a reconstitution claim and for those monies to be deducted from your portion of the community estate when the divorce is finalized.
3). Run up attorney’s fees. You’re angry at your soon-to-be ex spouse, and you want to make them miserable. A great way to accomplish this is to be unwilling to compromise, file meritless claims and do other things that drag out your divorce and run up attorney’s fees.
The trouble is you’re not just hurting your spouse, you’re also costing yourself a lot of money that you don’t need to—not to mention, delaying the day when you can move on with your life. Our advice? Play nice, and you’ll end up with more money in your bank account on the other side.
4). Assume you’ll get alimony. In Texas, spousal maintenance typically doesn’t come into play until after a couple is married 10 years or more, and it usually doesn’t last forever. That’s why it’s so important to be mindful and frugal about the monies, assets and debts you and your spouse share during a divorce.
It’s also worth noting, that unless you and your spouse agree upon a settlement that provides alimony, a lump sum of money or other forms of financial dispensation, how much money you will receive in spousal support will ultimately be decided by the judge. The judge’s goal will be to determine an amount that will cover your reasonable needs following divorce, and that amount will fall within the spousal maintenance guidelines laid out in the Texas Family Code.
Texas family court judges are also known for their no-nonsense sensibilities. If your actions during the divorce come across as greedy or insincere, it could cost you.
5). Get remarried as soon as the ink on your divorce decree dries. While this may sound sexist, at the Sisemore Law Firm, we typically find that men get remarried more quickly than women do following divorce. Some men just have a hard time living alone and others get remarried because they think it will help them overcome the feelings of grief they’re dealing with due to divorce.
Our advice? Don’t rush things. Before you remarry—whether you’re a man or a woman—take time to figure out why your previous marriage didn’t work out in the first place. Many people make the same mistake twice, especially when they don’t allow themselves time to heal.
Make your finances a priority from the outset of your divorce
One of the first questions you should ask your divorce attorney is, “What steps should I take to assess my finances and understand how money should be handled during my divorce?” He or she can provide some initial insight and connect you with financial and tax experts to take a deeper dive.
Your divorce lawyer can then counsel you further on how to avoid common financial mistakes during divorce and best steps to take to maximize the outcome of your divorce.
Need advice on finances during divorce in Tarrant County?
The experienced and reputable divorce attorneys at the Sisemore Law Firm are here to help. To schedule a confidential consultation with our founder Justin Sisemore, one of the top three best divorce lawyers in Fort Worth, Texas, call 817.336.4444 or visit our contact page to schedule online.