Avoid Common Birmingham Divorce Money Mistakes

Posted by Steven D. Eversole | Jun 14, 2012 | 0 Comments

One of the most important reasons to invest in a Birmingham divorce attorney with experience is that even fairly straightforward divorce proceedings can be rife with pitfalls that a novice may easily overlook.

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Years in this field have taught us that there are a great number of considerations you need to make when you file for divorce in Birmingham.

While each individual situation is unique – yet another reason to choose your lawyer carefully – there are some common mistakes that we see a lot of divorcing couples make.

The first of those is assuming that all things equal are equal. That's not double speak. Consider the following scenario: You agree to a 50-50 division of assets. You want to keep the marital home. Your spouse wants to hang onto the retirement account and pension. Both of these may be valued at $300,000. At first glance, this seems fair. However, a skilled divorce attorney will tell you it's not. Here's why: A house, especially in this market, is going to be a burden on your expenses. You're going to have to make repairs, pay taxes on it and when you go to sell it, you may not get all that investment back. However, a retirement account is a liquid asset, and its value is likely to grow at a faster pace than your home. This is not to say you shouldn't fight for the house if you want to keep it, but you need to have an attorney on your side who can help you sort through the correct value of the assets at stake.

The second common mistake is not considering taxes. This goes to the earlier point, but let's consider that one of you is going to keep $200,000 in an IRA, while the other is planning to hang onto the $200,000 taxable investment account. This is not an even trade because the IRA won't cost you money in taxes when it's withdrawn at higher income rates, while the person with the TIA is going to pay taxes when it is sold.

Thirdly, another common oversight is not making your attorney aware of all your retirement accounts. You need to educate yourself and make your attorney aware of it so that a qualified domestic relations order (or QDRO) can be established. This is an order that is necessary in order to collect those retirement benefits. Don't sign off on a QDRO without your attorney's close review.

Fourthly, if you have a joint credit card or some other joint form of credit, you will probably want to get rid of that. You can be held liable if he or she runs up the debt on that account. If possible, pay it off and close it before you file. If you're worried that your ex will try to open up a joint account while you're in the midst of the divorce proceedings, you do have the option to put either a security freeze or a fraud alert on your credit. Your attorney can give you more information about this.

And lastly, another big mistake people make is not planning their budget wisely while they are in the process of a divorce or after it's finalized. You may want to consider meeting with a financial planner, in addition to your divorce lawyer. Ideally, you'll figure out exactly what you need to live on prior to division of assets so that your attorney can help you fight for those assets in court.

If you are contemplating a divorce in Birmingham, contact Birmingham Family Law Attorney Steven Eversole at (866) 831-5292.

Additional Resources:

6 Financial Mistakes to Avoid in Divorce, By Teresa Bitler, Fox Business

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama

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