During a marriage, couples are likely to divide the daily chores between each other, including the responsibility of fulfilling financial obligations. When the couple divorces, this could mean one spouse is unaware of where they stand financially. And this could leave one party in worse shape than they expected to be in after the marriage ends. There are, however, a few steps that can be taken to avoid financial missteps.
Couples often end up fighting over who keeps the family house. Although this may provide some stability during an otherwise unsettling time, keeping the house is not the best option for everyone. Maintaining the house can be expensive. Similarly, one should think twice before accepting the house in lieu of the other party getting comparably valued investments. This means one party accepts the house while the other takes retirement accounts or bank accounts worth the same amount. While the amount may be equal on paper, in reality maintaining the house is more costly than the other financial obligations.
In addition to this, it is also important to note that not all financial accounts are treated equally. There is no tax incurred for taking money out of the checking account, while there is a tax implication for removing money from a 401(k) plan account. Withdrawals from the latter account are taxed as regular income.
There are multiple family law issues surrounding property division in a divorce-a process already complicated by the high emotional toll it takes on the parties going through it. However, it is important to know from the beginning what one wants from the divorce and how to go about getting it. Not all assets are equal and should not be treated as such.