In our blog we will try to provide you with general information regarding family law, as well as updates in important cases and statutes dealing with family law in New Hampshire. This is not to be construed as legal advice. Every case is unique and small facts can make a difference.
3 Common Mistakes In Divorce Settlements You Should Avoid
For most individuals, going through a divorce is one of the most far reaching, expensive, and trying experiences they will ever have. The proper mindset and attitude will increase your chances of obtaining a quick and adequate divorce settlement.
In order to be able to appropriately assess the situation and make the right decisions, here are 3 common mistakes you must avoid making:
1. Do not assume that your divorce will be quick and inexpensive.
Depending upon whom you hire to act as your NH divorce lawyer, the amount of monetary assets at stake, the level of cooperation between you and your spouse, etc. your divorce require much more time and monetary expenditure than you realize. For most couples, the entire process will take a minimum of one year, possibly longer. The total cost can range from several hundred dollars to thousands upon thousands, even if your divorce does not involve going to court.
Initially, you might believe that dividing your family’s finances would be a simple matter. Equitable property division that is proportioned according to each spouse’s divorce rights would tempt one to believe that each spouse would be entitled to half of what they shared together.
However, this mathematical formula rarely works in a divorce case. Two spouses will have unequal income potential and salaries. Often, many families will have lived beyond their means, and there may simply not be enough funds to go around. Such factors, which do not include attempts to “hang on” to each dollar, can considerably lengthen the divorce process. The additional time required only adds to the overall cost of the divorce.
2. Do not neglect to lavish enough attention on your income taxes.
Your income taxes will be one of the most critical components in determining your divorce settlement. In general, if property is transferred pursuant to the divorce, then it cannot be taxed; however, this changes if the property is subsequently sold. At the time of the sale, you become responsible solely for paying all of the taxes on the profit earned from the time you and your former spouse initially purchased it.
If you are currently going through the process of a separation, you must carefully consider how your income tax returns will be filed. Even though non-financial considerations must be taken into account, the Married Filing Separate filing category generally yields the largest overall tax rate. The category for Filing Head of Household usually produces the least amount.
It will also behoove you to review the tax implications of child support and alimony, dependency exemptions, and other tax credit benefits that come with having sole custody of a child.
3. Failing to recognize when you have an advantage in hand…
There will be certain specific decisions you must make. For example, do you want the family SUV that is worth $30K or the mutual fund that is also worth $30K? Do you want $250,000.00 right now or guaranteed lifetime payments that will begin when your spouse retires?
There is truth in the old adage that “a bird in hand is worth two in the bush.” This principle can generally be applied to divorce cases. The family SUV may be worth $30K at the moment, but with depreciation, what will it be worth next year? If you needed cash immediately, how much could it be sold for? By comparison, the mutual fund will only increase in value, is liquid, and can provide a financial cushion in times of emergency.
Likewise, guaranteed lifetime payments might sound secure, but you would have to wait many years before you could begin receiving them. It might be more prudent to take the cash now, make sound financial investments, and begin creating your own nest egg for retirement.
It is often difficult for a couple going through a divorce to take a good look at the bigger picture; however, striving to avoid the above mentioned mistakes will make the whole process much smoother. For more information about divorces in New Hampshire or for assistance with your own divorce, please contact one of our experienced NH divorce lawyers today.
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