Protecting Your Family's Future
 

Breaking Up Finances in a Divorce

When your marriage ends, one of the most difficult and perplexing tasks can be dividing up (and protecting) assets. Here are some of the most common mistakes people make financially in the middle of a divorce:

Failing to Consider Tax Implications When Dividing Property

One of the ways in which people commonly don’t end up getting a fair deal has to do with the potential tax consequences of owning certain property. Experts say it’s important to determine whether the dollars you are receiving are pre-tax or post-tax dollars. For example, if you take assets in an IRA in exchange for allowing your ex to keep the house, you will incur a tax obligation when you take distributions. However, your ex may incur no tax consequence upon the sale of the house, provided the net gain on the sale is below that allowed under the Internal Revenue Code.

Failing to Divide All Financial Accounts

There’s no benefit to keeping any joint accounts with your ex. In addition to bank accounts, you need to change credit cards, investment accounts and any debts/loans, including your mortgage. It’s also critical to change the beneficiary on life insurance policies, annuities, retirement accounts and investment portfolios.

Allowing Emotions to Control Financial Decisions

When it comes to dividing assets, you have to resist the urge to put any emotional attachment on a piece of property. If you do, you’ll likely pay a price for it. Don’t try to establish your own value for a house, or for personal property. Always get a professional to appraise marital assets at fair market value.

Failing to Account for All Assets and Income

In the rush to be done with a divorce, parties often fail to obtain a thorough accounting of assets and liabilities. It’s a good way to get the short end of the stick in a divorce property settlement—one in six people in a recent study admitted to hiding a bank account from a spouse.

Contact Us

At the office of Linda Stewart Law, PLLC, in Baytown, we bring more than 8 years of experience to clients in south Texas. To learn how we can help, call our office at (281) 420-8020 or contact us online. We offer an initial consultation at a reduced fee of $50. We accept credit cards and will set up a payment plan, if appropriate. Our offices are open Monday through Thursday, from 9 a.m. until 5 p.m., and until noon on Fridays. Evening and weekend appointments can be arranged upon request.

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The Benefits of Preparing for Divorce

Though divorce is always emotionally difficult, you can minimize some of the financial, personal and time challenges by thoroughly preparing for the process, once it’s clear that divorce is inevitable. Here are some of the things you can do.

Protect Yourself Financially

Whether you are the sole breadwinner, a stay-at-home-parent or one of two working parents, a divorce will have a significant impact. You may face the significant loss of income, be required to pay substantial amounts in child or spousal support, or wind up with a big chunk of the marital debt.  To minimize the impact, put together a file that contains all of the following:

  • Pay stubs for the last two years
  • Bank statements for the last two years
  • Current investment and retirement account statements
  • Documentation of any life insurance policies
  • Copies of tax returns for the last five years
  • A copy of your credit report

Protect Your Right to See Your Children

Custody is never an easy matter to resolve. You want what’s best for your children, but you also want to play an active role in your child’s life. All states use the standard of the “best interests of the child” when determining who will have custody. If you believe that custody may be an issue, you need to do the following:

  • Identify what you believe will be in the best interests of your children and why
  • Document anything about your ex that you believe may put your children at risk. Remember, though, that this is not about disparaging your ex—it’s about protecting your children. Don’t exaggerate isolated incidents in an attempt to gain favor with the courts. You’ll only hurt  your children in the process

Contact Us

At the office of Linda Stewart Law, PLLC, in Baytown, we bring more than 8 years of experience to clients in south Texas. To learn how we can help, call our office at 281-420-8020 or contact us online. We offer an initial consultation at a reduced fee of $50. We accept credit cards and will set up a payment plan, if appropriate. Our offices are open Monday through Thursday, from 9 a.m. until 5 p.m., and until noon on Fridays. Evening and weekend appointments can be arranged upon request.

Se Habla Espanol | ASL and ESL Services Also Available

Landing On Your Feet after Divorce

When you are going through a divorce, it can be difficult to believe that life will return to normal again. It will go on, but it won’t ever be the same. There are specific steps you want to take to make certain that you are moving forward, so that the past won’t keep catching up to you.

Get a New Bank Account

This is actually a good idea as soon as you know you are going to file for or be a defendant in a divorce proceeding. You want to start putting your money into your own account, so that your ex doesn’t have unlimited access to it. You should also close any joint accounts you had with your ex.

Replace Your Credit Cards

Terminate any joint credit cards immediately. It may also be time to think about whether or not you want to open new cards. Divorce can be an emotional time—if you are prone to spending money in response to emotional trauma, you might be better served not opening a new credit card. Furthermore, because you won’t have financial stability for a little while, you may want to operate primarily on a cash basis for a while.

Change Your Beneficiaries

If your ex is named as a beneficiary on a life insurance policy, IRA, retirement plan or in a will, you need to modify that. With respect to insurance, you may want to obtain a life insurance policy on your ex (owned by your ex) to cover alimony or child support in the event of his or her premature death.

Notify the Government When Necessary

The IRS and the Social Security Administration should be notified of your divorce.

Contact Us

At the office of Linda Stewart Law, PLLC, in Baytown, we bring more than 8 years of experience to clients in south Texas.

To learn how we can help, call our office at 281-420-8020 or contact us online. We offer an initial consultation at a reduced fee of $50. We accept credit cards and will set up a payment plan, if appropriate. Our offices are open Monday through Thursday, from 9 a.m. until 5 p.m., and until noon on Fridays. Evening and weekend appointments can be arranged upon request.

Se Habla Espanol | ASL and ESL Services Also Available

 
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