Financial mistakes are often made during the divorce process. These avoidable errors put one or both parties in a worse position than they would otherwise have been in post-divorce. As a former business owner with an MBA as well as a law degree, Attorney Bob Matteucci finds this incredibly frustrating.
Below are six common financial mistakes New Mexico couples make when getting divorced, and how to avoid them.
1. Not educating yourself about your and your ex’s finances.
Many couples have one person who makes the majority of the couple’s financial decisions. This isn’t necessarily a bad thing, but it can cause problems when it is time to split up.
If the hands-off partner doesn’t have a realistic idea of what assets and debts the couple has accrued, he or she could be taken advantage of during the split, and have difficulty financing a post-divorce life.
The hands-off partner needs to educate themselves about their financial situation or hire someone who can be responsible for that task.
2. Forgetting about future expenses.
Many people who are going through a divorce are so focused on the divorce itself that they fail to prepare for post-divorce life. Each partner is going to have added expenses as they set up a new household. And some post-divorce expenses like child support or spousal support payments significantly reduce the payer’s disposable income.
Attorney Bob Matteucci talks with all of his clients about their post-divorce goals, then figures out how to help them move in that direction.
3. Thinking that all assets can easily be divided equally and fairly.
New Mexico is a community property state, which means that assets accumulated during the marriage are considered the equal property of both partners. By law, this pot of assets must be equally divided at the time of divorce unless the couple mutually agrees otherwise.
Most assets owned by a couple are illiquid, like houses, cars, and pensions. And other assets — like a business started by one party — can lose value if they are divided. It is critical to work with an experienced attorney like Bob Matteucci who can help you negotiate an equitable division of your marital assets while protecting any separate property you brought to the relationship.
4. Forgetting about debt.
Debts, like assets, are considered community property. This means you and your former partner are both equally responsible for any loans taken out or expenses incurred during the marriage.
Divorcing parties must ensure that debts, as well as assets, are divided up and that the proper paperwork is filed to ensure each former partner is only responsible for their own portion going forward.
5. Failing to consider the tax implications of certain money moves.
You may end up owing significantly more than usual to Uncle Sam the year of your divorce. This is especially true if the assets you must liquidate and divvy up include real estate or investment accounts like 401ks and IRAs. In many cases, however, these assets can be divided without incurring additional taxes or penalties if they are divided properly.
It may be wise to consult with an accountant and/or financial advisor in addition to your divorce attorney to ensure you are doing all you can to minimize the amount you owe the government.
6. Making decisions based on emotion.
Getting divorced stresses your finances and your emotions. It is critical that you look to the future with clear eyes and don’t let emotions cloud your judgment. Working with an attorney you trust to give you unbiased counsel can help you avoid making financial decisions you later regret.
Serving New Mexico Families with Dignity & Compassion
Attorney Bob Matteucci is ready to help you avoid these common financial mistakes and smooth the path forward as you enter your post-divorce life. He is a business-minded advocate who can help you negotiate a fair divorce settlement.
If an amicable agreement cannot be reached, he knows what arguments the judge assigned to your case will find persuasive as he or she decides your financial future.