There are a lot of big and little details that have to be worked through when a married couple decides to call it quits. If they are not careful, any mistakes made during the divorce process may prove costly. This week, this column will address several financial mistakes divorcing couples in Louisiana may want to avoid.
Mistake number one: failing to plan and stick to a budget. Divorce will inevitably lead to the loss of income. Creating a budget based on one's new income level before the start of settlement negotiations may prove helpful, as one will know what he or she has to work with and what he or she needs to get out of divorce proceedings. Along with that, living within one's means now will put one in a better place when the dissolution process is complete.
Mistake number two: keeping the house. There are some cases where keeping the house makes sense, but there are many where it does not. The party wishing to keep the home may want to take a good look at the actual cost of maintaining it and how it fits into their new budget before taking the time to fight for it.
Mistake number three: failing to consider taxes. There are several things to consider here. First, capital gains taxes may have to be paid on any property sold. Second, one's tax liability may change based on one's new filing status. Third, tax penalties may be issued with the division of certain assets if one is not careful.
Failing to budget, keeping the home and failing to think about taxes -- among other things -- can end up costing Louisiana residents a significant amount of money. So, when they come out of divorce proceedings, they are starting in a bad way financially. With the assistance of counsel, these and other common divorce mistakes can be avoided, and a fair settlement reached so that one starts post-divorce life in a good place.