5 Mistakes to Avoid In a Divorce

5 Mistakes to Avoid In a Divorce

August 06, 2019

Going through a divorce is like a death.  I haven't experienced one, but I have met with so many people who have gone down this road.  The process can be exhausting, and there are many moving parts, especially if you have accumulated assets and built a long history together. People who have gone through this fight and come out with just a few bruises have had a team of people working with them through the process. Just having an attorney by your side, may not always be enough. The attorney is juggling your case along with other matters. You ultimately need to make sure all of your needs are met in the process. 

I want to share with you a few mistakes and reminders to avoid during a divorce:

Make Sure You've Changed the Titling On All of Your Accounts.

It's important to remember to remove your spouse's name from your bank accounts, credit cards, your investment accounts, and retirement accounts. Unless you are required to keep your soon-to-be ex-spouse on your life insurance, don't forget to name a new beneficiary. Changes should be made on your individual and employers insurance.

Don't Forget about the QDRO

A Qualified Domestic Relations Order (QDRO) is a judicial order entered as part of a property division in a legal separation or a divorce. The QDRO process divides a retirement/pension plan (this includes private pensions, 401(k), 403(b), and 457 plans). Make sure you file and complete the QDRO before the divorce is final. If the payee dies before the process is complete, the receiving spouse may be out of luck if they were planning on using a portion of their ex-spouses pension for survival.

Joint Tax Returns

If you have been filing jointly during the marriage, don't forget to address who will be responsible for the Federal and State income taxes the year of the divorce.

Refinance the Mortgage Before the Divorce Is Final

Not refinancing the mortgage can be a nightmare for the person not keeping the house. It took a dear friend of mine a couple of years to clear the ashes of her divorce surrounding her old family home. Here's the situation. John and Judy agree that John would keep the family home post-divorce, and Judy would receive other assets to make up for her share of the equity in the home. A quitclaim was done to remove Judy's name from the title, but John didn't refinance the original mortgage removing Judy before the divorce was final. John stopped making mortgage payments, so the mortgage company came after Judy. The late payments hurt Judy's credit.  The mortgage should have been refinanced before signing the divorce papers.

Pre and Post-Divorce Financial Plan

Living on two incomes is much easier than living on one income.  To paint a picture of what it would be like living on one income, meeting with a financial planner before the divorce is crucial. This process is equally as important post-divorce. If you have won a settlement in a divorce and you are not accustomed to handling the finances during your marriage, you may quickly find yourself running out of money. More women and children suffer financially after the death of a spouse and divorce.

About Terrell Dinkins, MBA, ChFC®, CDFA®

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Terrell Dinkins, MBA, ChFC®, CDFA® is an investment adviser representative of and offers investment advisory services through OBN Wealth Advisors, LLC, a registered investment adviser offering advisory services in the State of Georgia and other jurisdictions where registered or exempted. Main Office: 950 Eagles Landing Pkwy, Suite 216, Stockbridge, GA 30281. Tel: 404-723-9780. Website: OBN Wealth Advisors. Image courtesy of Gerd Altman from Pixabay.