Ignorance in Divorce Makes Financial Victims
In the midst of a divorce, errors of commission and errors of omission are easy to make. A divorce settlement is a business negotiation where both kinds of error can have long-term consequences. Many of mistakes happen not because of what a person did wrong, but what he or she did not do at all.
In a contested divorce, where the spouses disagree about the terms and conditions of the property settlement, a party can become a financial victim very easily if he or she is in the dark about marital finances.
Ignorance is the biggest liability a divorcing spouse can have. The spouse who always handled the money and made all of the financial decisions in the household often has an unfair advantage when they settle the financial issues of their divorce. Ignorance is a divorce financial mistake of omission, not commission, as are many divorce financial mistakes, described below.
Ignorance can be willful, such as ignoring indications that a spouse is contemplating a divorce. In secret, one spouse is preparing for a divorce, selling assets or re-title marital assets unilaterally. A spouse should keep an eye on joint checking and brokerage accounts and the cash value of life insurance policies. Tracing some assets requires legal and forensic accounting experts.
Going into a divorce, both sides should have all available information about both spouses’ income and assets -- what they own and what they owe both as a couple and what each owns and owes as individuals. Copies of important financial records, such as account statements (savings, brokerage, and retirement) and all other information about the marriage and spouses’ lifestyle (checking accounts, charge card statements, tax returns) should be in hand.
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