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Money mistakes people who make in divorce

New York individuals who wish to end their marriage may be in a hurry to terminate this legal relationship. However, many individuals commonly make mistakes related to the division of assets that are part of the marital estate. Making some of the mistakes mentioned below can have effects that can last for years.

One common mistake is to fight for the house instead of retirement benefits. Spouses may want to keep the property that they have helped to make a home and where they have raised their children. However, in many situations, the retirement account is larger than the value of the home, especially for spouses who get divorced later in life. Instead, individuals should be willing to sell the house and split the proceeds. The retirement account may be more valuable, containing securities that may increase in value over time. If an individual receives part of his or her spouse's retirement account, he or she should roll these funds into an IRA rather than cash out the funds and be faced with penalties.

Another common mistake is passing up their spouse's Social Security benefits. Many individuals are unaware that they may be entitled to their spouse's retirement benefit if they were married for ten years or more. If a person is 62 or older and currently unmarried, he or she may be able to get up to half of the former spouse's retirement or disability benefits under certain circumstances. Additionally, they can opt to receive their former spouse's benefits now and delay receiving their own until they are older and when they will likely receive a larger amount of benefits.

Individuals who would like to avoid making a meaningful mistake during the divorce settlement process may want to discuss their case with a family law attorney. Such an attorney can recommend steps that a client can take to help ensure a financially stable future.

Source: Forbes, "The Big Money Mistake Divorcing Women Make", Kerry Hannon, July 03, 2014

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