For most men and women who are going through a divorce, the process is new and intimidating. While many divorcing individuals simply want to finalize a divorce settlement as soon as possible and move on with their lives, it's important not to rush through the process or make decisions in haste.
The truth is that mistakes made during the divorce settlement process can greatly impact an individual's life for many years to come. This is especially true when discussing the division of property and potential financial implications.
Texas is a community property state which may or may not work in an individual's favor when divorcing. In cases where an individual with few assets married young and is seeking a divorce after 30 years of marriage, the majority of assets will be considered marital property and thus subject to equitable division during a divorce.
In most divorces, financial concerns are only trumped by those related to child custody. It's important, therefore, that individuals have a clear and comprehensive understanding of financial matters prior to signing off on a divorce settlement. For example, a mother may negotiate lower spousal support payments for primary custody of a child. Doing so, however, could prove to be a great financial burden, making life post-divorce difficult.
Individuals in the midst of divorce negotiations also often fail to understand the varying complexities and implications associated with different financial decisions. For example, an individual may be surprised to learn of the high taxes and penalties associated with a particular retirement account or may fail to account for projected cost of living increases. Likewise, an individual may fail to take into account how an ex-spouse's death or outstanding debts may impact one's future financial security.
While in the midst of an emotionally-laden divorce, it can be difficult to make rational choices and decisions related to finances. It's critical, however, that an individual enters into divorce negotiations with comprehensive knowledge about existing assets and debts and is willing to put in the time and effort that may be needed to try to secure a divorce settlement that will provide for one's future financial security.
Source: Time, "The 7 Biggest Money Mistakes That Divorcing Women Make," Lili A. Vasileff, July 9, 2014