negotiating-divorce-settlementDivorce is one of the most emotional times in a person’s life and yet is also when you have to make permanent, life-altering financial decisions in your Divorce Settlement.  Don’t make these decisions based upon guilt or fear.  Empower yourself!!!  There are Seven Important Factors to Remember When Negotiating Your Divorce Settlement.  You Want to Strive to Be an Empowered Decision-Maker, and in Control of Your Financial Future to the Extent Possible Under NY State Law.

1. Money Will Almost Always Become an Issue in Divorce and Divorce Settlement Agreements

You may be thinking that you didn’t need to read that here, you know that already.  However, it is likely that you are underestimating how much of an issue it will become.

Even with the promise of fairness from your soon to be ex-spouse, or of a deal that sounds too good to be true, you still should do your homework. It is extremely important to remember not to make offers during negotiations out of feelings of guilt or fear, or simply to “get this all over with”.  Seek out the appropriate professional legal help so that years from now you will not feel badly that you agreed to something too quickly or without thought to its impact on your future.  Also, part of doing your homework is to budget, budget, budget!  Make a plan for the future, not just the next few months.  You will gain confidence if you have an attorney who will work with you to prepare an estimate of your monthly budget to determine if you can afford to retain certain assets.  You don’t want to end up living out of your car….

  1. A So Called 50/50 Division of Property is Not Always Equal Even in Settlement Agreements

For example, you both might want an antique bed, one party will get the bed the other will get one half of the monetary value of the bed at the time of the settlement.  It is unlikely that the person who got one half of that monetary value will feel they got a satisfactory 50/50 split of the asset.  Also, a $200,000 house does not always equal $200,000 in other property or investments.  There are tax implications affecting many assets and their values very differently.  Overlooking this fact may mean that you get less property than you should, or end up with future tax hits that you are not prepared for or even aware of.

  1. You May Need to Divorce Your House

Whether or not to retain the family’s often largest asset should not be an emotional one.  Although difficult, this decision should be made by considering the responsibility and the money involved.

Before entering into a settlement agreement find out if you can qualify for a refinance or mortgage on your own.

Many people often believe IN ERROR that a lender will simply remove their ex-spouse’s name from loans-this is seldom the case!

If you do qualify you should still, ask yourself:

* How does this fit into your budget?  Can you afford the monthly mortgage?

*Can you afford the regular expenses for living in the house?  What about unexpected maintenance such as roofs, appliances etc.?

*Who is going to have the time and energy to maintain the home, lawns, cleaning, repairs, snow?

*Will you be left with any repairs or “stuff” left from prior to the separation?

  1. Understand the Value of Your Investments and Retirement Assets.

There are no do-overs in divorce actions.  Get advice on the market risk of your investments         when deciding which investments you want to keep and which you will waive interest in. There can be hidden or unknown costs associated with many types of investments.  There are also often tax consequences down the road.  Seek out professional assistance from Certified Public Accountants, Investment Professionals as well as your attorney so that years from now you do not feel you made mistakes because you agreed to a settlement too quickly.

  1. Request that the Payor of Child Support and/or Maintenance, Spousal Support is Life Insured

In the event that the payor dies if you do not have life insurance these payments generally end.  To suddenly be without that income could be financially devastating. Also, attempt to get the same life insurance even if you are the Payor.  What happens if the Payee dies and you have the children?  There will be no one to provide child support.  What will this mean for you and your children financially?

  1. Divorce Decisions May Have Significant Implications for Your Tax Return

Do your research before entering into a settlement agreement regarding the tax consequences of your proposed choices?  Have a professional complete at least your first tax return after your divorce is final.

  1. Retain an Attorney Who Knows More than the Law.

Plenty of lawyers know who to draft and file papers for Divorce.  However, finding attorneys who are knowledgeable and take the time to consider the factors set forth here are rare.  But finding one will make all the difference for your financial future and the well-being of your family.

See related blogs:

Can Custody Agreement Be Changed?