Divorcing spouses in California should approach their property division settlements with caution and avoid these common pitfalls.
Spouses in California who have made the difficult decision to end their marriages often have a challenging road ahead of them when it comes to finalizing their divorces. From agreements about children to changes in social circles, a divorce truly does touch virtually every part of a person’s life.
When it comes time to decide how to split a couple’s joint assets and liabilities, there are some common mistakes that people should know about. Avoiding these may help California spouses to avoid unnecessary losses now and down the road.
Making decisions based on emotions
Women in particular are known for wanting to work hard to keep their family homes after getting divorced. This is commonly done for the sake of providing stability for kids but is also related to a woman’s tendency to be very connected to her home that is essentially her nest. However, CNBC suggests that these emotional reasons may not lead people to make decisions that are best for them in the long run.
Homes can sometimes appreciate in value but they can also depreciate based upon market conditions. And, no matter what the market does, they always cost money to maintain. This money consists of far more than the mortgage payments. Insurance, taxes, maintenance and repairs need to be factored into the equation when deciding the true cost of home ownership. Similarly, there may be capital gains taxes that could be owed if a home is eventually sold and these may offset some of the benefit of keeping the home.
Considering all assets equally
Simply because the current dollar value of two assets is the same does not really mean they are equally valuable to a particular spouse. U.S. News and World Report indicates that two assets may have very different tax implications which can dramatically change the true value of them to a spouse. These types of realities should be evaluated carefully before finalizing a divorce settlement.
Staying financially connected
According to Bankrate, spouses who choose to keep a joint mortgage even after a divorce rather than refinancing into one person’s name leave themselves very vulnerable. If the spouse who has responsibility for making mortgage payments fails to do so, the other spouse may end up being liable for those payments. By the same token, any negative marks on the mortgage will show up on both spouses’ credit reports and there may be nothing that a divorce decree can do to help that.
Not getting professional input
Perhaps the biggest mistake California spouses make in their divorces is not involving an attorney early enough. With potentially substantial and long-term financial issues at stake, working with an experienced lawyer through the process should always be done. This gives people the best opportunity to carefully review the big picture before finalizing an agreement.