Financial Mistakes To Avoid In Property Division
When Charlotte couples divorce, they must divide shared marital assets and debts, but there are a number of mistakes that people make at this point. One is taking the house in exchange for a more liquid asset of equal value. While this may seem like a fair deal, it does not take the cost of upkeep into account. Furthermore, the person might find maintaining the house on a single income to be unaffordable.
Other ways of splitting property may have tax implications. For example, a person who gets a 401(k) account while the other person gets a checking account should remember that withdrawals from the retirement account will be taxed. However, splitting a 401(k) requires a qualified domestic relations order. This allows it to be divided without incurring penalties. The person who receives a portion of it then must roll it over into an individual retirement account within a certain period of time. In general, the value of any asset should be assessed with taxes and other costs in mind.
If one person is getting alimony or child support from an ex-spouse, that person may want to consider taking out a life insurance policy on the payer. Otherwise, there may be no way to make up that lost income if that person dies.
Since a divorce often results in a lower standard of living for one or both individuals, making sure that property is divided fairly can be important in ensuring a person’s financial security. While people should not argue over unimportant issues and drag out the process, they should also not hesitate to fight for property that they have a right to claim such as part of a retirement account. A person might want to discuss a strategy and goals with an attorney in order to stay focused during negotiations.