Financial Mistakes to Avoid During Your Divorce

Financial Mistakes to Avoid During Your DivorceIt is easy to think of a divorce settlement in terms of winners and losers. You may feel like you won the negotiations if you obtained most of the marital properties you wanted and secured favorable support payments. However, there is more to a divorce settlement than the initial financial totals:

  • Property ownership can come with additional expenses;
  • Some properties have more potential for growth; and
  • How support payments are structured can favor one side in terms of taxes.

You need to take a broad perspective of the financial consequences of your divorce settlement.

Pursuing Your Home

Your marital home is probably the most valuable property from your marriage, so obtaining ownership feels like a huge win. Keeping the home is most crucial if your children will be living with you for a majority of the time after the divorce. However, owning the home can be costly and risky:

  • You will need to compensate your former spouse by giving up several valuable assets;
  • As a single owner of the home, your capital gains tax exemption will be cut in half;
  • You will be responsible for the expenses associated with maintaining the home; and
  • You may soon decide that you need to relocate and sell the home.

Predicting Growth

Marital properties should be measured by both their current and future value. Some assets, such as real estate and stocks, have greater potential to increase in value over time. Your division of property may be equal based on the current value of properties, but it may seem less equitable in the future if your former spouse received a majority of the properties that have grown in value. However, growth can be unpredictable. If the equitability of your divorce agreement relies too heavily on properties with growth potential, you risk a financial loss if those properties do not increase in value as expected.

Child Support vs. Spousal Support

When a former spouse is responsible for both child support and spousal maintenance, the two payments may seem interchangeable. However, there is a difference in terms of taxes. Unlike child support, spousal maintenance is taxable for the recipient. The payor of spousal maintenance can also claim it as a deduction. If you are the recipient, you should be careful about allowing your former spouse to shift payments from child support to spousal maintenance.

Smart Financial Decisions

In a divorce negotiation, you must consider how the division of your properties will affect you for several years moving forward. A Kane County divorce attorney at Goostree Law Group has the knowledge and experience to help you identify the best properties to keep during your divorce. To schedule a free consultation, call 630-584-4800.

Source:

http://www.divorcemag.com/blog/financial-matters-during-divorce

Goostree Law Group

Goostree Law Group

 555 S. Randall Road, Suite 200
St. Charles, IL 60174

 630-584-4800

 1770 Park Street, Suite 205
Naperville IL 60563

 630-364-4046

 400 S. County Farm Road, Suite 300
Wheaton, IL 60187

 630-407-1777

Our Illinois divorce attorneys represent clients in Kane County, DuPage County, Kendall County and DeKalb County, including Geneva, Batavia, St.Charles, Wayne, Wasco, Elburn, Virgil, Lily Lake, Aurora, North Aurora, Elgin, South Elgin, Bartlett, Crystal Lake, Gilberts, Millcreek, Maple Park, Kaneville, LaFox, Yorkville, Oswego, Plano, Sugar Grove, Big Rock, Bristol, Newark, DeKalb, Sycamore, Naperville, Wheaton, West Chicago, Winfield, Warrenville, Downers Grove, Lombard, Oak Brook, Streamwood, Hoffman Estates, Barrington, South Barrington, Lake Barrington, Schaumburg, Big Grove, Boulder Hill, Bristol, Joliet, Kendall, Lisbon, Minooka, Montgomery, Plainfield, Sandwich, Yorkville and many other cities.

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