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Avoiding financial mistakes after a divorce

After divorce, some ex-spouses in Texas may suddenly feel financially liberated. However, this doesn't mean they should celebrate the occasion by going on a spending spree. This is one of the many financial mistakes that recently divorced individuals commonly make.

Working with a financial adviser and making a financial plan may be a good idea. This could help prevent additional errors such as selling assets to pay bills. It's important to note that there can be significant taxes on the sale of some assets. Making a financial plan may also help a divorcee prepare for alimony payments. Some people have gone so far as to quit a job to avoid alimony, but this does not solve the issue.

Soon-to-be exes should also understand that alimony will no longer be tax-payable or tax-deductible starting with new divorces in 2019. It is possible that this will result in less money for both recipients and payers. There are other types of tax implications that divorcees should also be aware of. For example, a document known as a qualified domestic relations order is necessary to avoid taxes and fees when dividing a 401(k).

People who share a home should also keep expenses in mind. If one ex takes the home, that person should be able to pay for the mortgage and other costs associated with the property.

An attorney may be able to help a client understand how a divorce might proceed. Whether a couple plans to negotiate the divorce settlement or go through litigation, an attorney can provide guidance throughout the process. Couples often prefer to try to negotiate first. Negotiation can be an emotional process, but knowing this ahead of time can help the couple decide what to compromise on.

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