Insight

Split Decisions

Divorce is inevitably fraught with a torrent of emotions on both sides. Don’t let this occlude your ability to plan rationally and dispassionately to ensure as smooth a process as possible. Here are five common pitfalls to avoid.

Two people standing on either side of a heart made out of curving roads
Jonathan Merel

Jonathan Merel

December 19, 2022 12:00 AM

WHEN PEOPLE ARE eager to end their marriage, guilt, anger and loneliness will sometimes cloud their judgment and contribute to avoidable mistakes during the divorce. The process is undeniably stressful and emotionally draining, especially if you’re worried about child custody and coparenting. Even when children aren’t involved, though, a variety of financial issues can substantially affect the lifestyle both parties have grown accustomed to during their marriage.

If either spouse makes a costly error in haste or because they haven’t fully assessed their options, the consequences can linger long after the divorce is final. This is why you need to take a step back and carefully approach your split from multiple angles so you can avoid these five common mistakes, any of which will leave you dissatisfied with your outcome.

Mistake No. 1: Seeking Revenge or Acting Out

I’ve seen people caught completely off-guard when they discover their spouse has filed for divorce, and they become so angry that their resentment guides their every decision during the legal process. I’ve also met people who seriously contemplate filing for divorce with the sole purpose of inflicting as much damage as possible through the court, solely to get revenge.

When divorcing spouses act vindictively, it often leads to disruptive behavior that only prolongs the process, ultimately costing both parties time and money that could be put to far better use elsewhere. A lengthy divorce can also create more stress for children during an already difficult time.

Whether you feel like your spouse caused the rift that ended your marriage, and you desire retribution or you want to secure a specific asset you know has special meaning to them, acting out of spite usually backfires. Frustration and anger are natural but acting on these emotions instead of making rational decisions that will set you up for a better future can negatively affect your life once the marriage is dissolved.

All this is just one of the many reasons you should consult with an experienced attorney as soon as you know you’re getting divorced—or even sooner, if your marriage is in obvious turmoil. In addition to providing legal counsel, a good attorney knows how to quell clients’ emotional responses and sway them to act in a manner that will lead to better results. Talking to a therapist or family counselor can also help you control your emotions and learn useful tools for managing and improving your mental health.

When divorcing spouses act vindictively, it often leads to disruptive behavior that only prolongs the process, ultimately costing both parties time and money that could be put to far better use elsewhere. A lengthy divorce can also create more stress for children during an already difficult time."

Mistake No. 2: Failing to Create a List of Assets

In many marriages, it’s not uncommon for one spouse to have a better understanding of the couple’s finances and assets. Often, that person will know exactly how much money is in joint bank accounts and how well their investments are doing, while the other is oblivious to this information and contributes to the household and marriage in other ways. The spouse with the financial knowledge has a decided advantage here because they can cover these issues in their case strategy more quickly and thoroughly than the spouse who is out of the loop.

If you didn’t handle any of the finances, you must create an inventory of what you’ve acquired or accumulated during the marriage before attempting to split assets. This should include anything that can be considered an asset or liability—bank accounts, investment portfolios, retirement accounts, life insurance policies. Write down all the physical possessions you jointly own, too, even those you don’t necessarily want to keep.

It can be detrimental when couples decide they want to quickly divide their possessions in the early stages of the divorce, as this often leaves one spouse at a substantial disadvantage. This can be especially devastating in a high-asset divorce because the spouse with greater awareness of the finances might attempt to conceal assets or “divorce plan” to maximize their value without the other spouse knowing.

Even if you aren’t involved in a high-asset divorce, allowing your spouse to keep something seemingly minor—such as a comic book collection you helped them accumulate—so you can keep the nicer furniture or items you need to continue your hobbies, can prevent you from securing a fair share of what you’re entitled to under the law.

While you might not want to store your ex’s comic books in your new home after your divorce, some of the comics in the collection might one day be worth hundreds, even thousands of dollars. As a financial contributor to the collection, you deserve a portion of its value. To ensure an equitable outcome, spouses need to determine the current fair-market value of all their possessions.

It’s not uncommon for one spouse to have a better understanding of the couple’s finances and assets."

Mistake No. 3: Forgetting to Update Your Estate Plan

If you have an estate plan that names your spouse the executor, trustee or beneficiary of a will or trusts, you need to revise it to reflect your current wishes now that you know you’re getting divorced. If you leave it as is, your wishes won’t be carried out after you pass away, and your former spouse may inherit what you initially left for them.

You can revoke your old will and execute a new one to make sure the inheritance your spouse would have received goes to the correct beneficiary. The same goes for trusts: Create new ones to make sure your ex can’t control assets you leave for other beneficiaries.

Mistake No. 4: Disregarding Tax Implications

People often become so entwined in the emotional aspects of divorce that they forget there are tax implications to any award of marital assets. It’s vital to understand that nearly every major financial decision you make has practical consequences.

Although some transactions related to a divorce are not taxable, you should consult an accountant or financial planner to address any potential tax effects of your divorce. It’s also important to note that if an IRS audit uncovers issues with returns you and your spouse previously filed together, you’re both potentially liable for tax debt.

Spouses can get assistance with their taxes from the federal government after they divorce. To qualify, you must be legally separated or divorced and pay your taxes.

Mistake No. 5: Having Unrealistic Expectations About the Outcome

To reach an equitable divorce agreement, both spouses need to adjust their expectations. If you’re combative over every issue because you both refuse to budge, you’ll end up in a courtroom and the divorce will drag on at a high cost to both of you.

Reaching a fair agreement requires some give and take from each side. Divorcing spouses need to approach negotiations in good faith and show up intending to make proposals that will help both parties find middle ground. Do your best to be reasonable when discussing settlement terms and remember you’re not likely to get everything you want, whether it's full custody of your children or the cars or the house.

In addition to a lack of realism in negotiations, spouses often make the mistake of overlooking the fact that maintaining two households can cost more than they’re accustomed to spending. For example, you might be awarded the marital residence as you wanted; however, the financial support agreements in your settlement could mean you have less money to pay the mortgage or other expenses.

Financial planning is essential when you’re transitioning to a new lifestyle after a divorce. Spouses who fail to set financial goals or devise a concrete plan for the assets they’re awarded tend to make poor decisions after the divorce and often find themselves lacking the resources they need to maintain their desired lifestyle.

Some people also have unrealistic expectations about retaining their health insurance. This typically happens when one spouse was covered by the other’s policy. This can be a major issue if you’re over 50 and divorce before you become eligible for Medicare, which occurs at age 65. Although you can remain on your former spouse’s policy through COBRA for up to 36 months, it will likely cost much more than what you previously paid. If you don’t think you can afford to pay for a new policy without help from your spouse, consider a legal separation, under which you might be able to keep the same health insurance during the division of assets.

To reach an equitable divorce agreement, both spouses need to adjust their expectations."

Final Thoughts on Avoiding Costly Errors

Complicated procedures, tense negotiations and the hassle of simply enduring the process can lead people to make these and other costly mistakes. Divorce is never easy, but unforced errors will only compound your struggles.

Whether you know that divorce is inevitable or you were just served with papers, you need to speak with knowledgeable professionals who can assess all your legal and financial options and craft a feasible strategy that you can follow to ensure you don’t make mistakes that will hurt your future.

Jonathan Merel is the founder of the Law Offices of Jonathan Merel, P.C., a leading family law firm based in Chicago. Known as a skillful and aggressive negotiator, Jonathan is an experienced attorney who advocates for his clients in divorce and family law proceedings. His ability to settle heated divorces in multimillion-dollar marital estates and contested custody disputes has gained a great deal of respect from fellow attorneys and judges. Jonathan’s philosophy is to build trusting relationships through open and frequent communication. Founded in 2009, Merel has become a premier law firm in Chicago.

Headline Image: Adobe Stock/ freshidea

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