5 financial missteps Colorado spouses should beware of during divorce
Divorcing Coloradans should be careful not to overlook property and real costs, fight needlessly, pursue unfavorable assets or forgo legal representation.
Divorce can present a financial challenge for many people in Broomfield, even when it is handled logically and strategically. Unfortunately, many spouses may make emotional or shortsighted missteps that can make divorce even more financially strenuous. It’s imperative that separating spouses in Colorado understand and avoid the following common and harmful financial mistakes.
1. Leaving out assets
Due to an aversion to conflict or a lack of legal knowledge, many spouses may fail to pursue or negotiate for assets that they are legally entitled to. Many people don’t realize that in Colorado, both spouses have a right to any property that either spouse acquired during the marriage, unless the property was a gift or inheritance. The Wall Street Journal recommends that spouses take the following steps to make sure all property is accounted for and distributed fairly during marital property division:
- Review tax returns, account statements and other financial documents to ensure an accurate count of marital assets and debts.
- Enlist a professional to assess the worth of assets that are difficult to valuate, such as a business that one spouse owns.
- Take stock of valuable and easily overlooked items, such as art, vehicles and other collectibles.
Spouses should also take any marital debt into account when taking inventory of assets and determining what property to pursue.
2. Fighting for the house
Many divorcing spouses prefer the thought of keeping the family house, rather than selling it and splitting the proceeds. According to USA Today, parents often want to keep the house to spare their children from needless upheaval. Some spouses also feel invested in or attached to their homes. However, spouses should remember that maintenance work and upkeep costs can often prove burdensome. In the worst case, spouses who keep the family house may end up selling it later at a significant loss.
3. Overlooking hidden costs
Spouses should also be careful to evaluate any expenses associated with various forms of marital property, including real estate, stocks or retirement accounts. At the time of a divorce, many people may overlook future costs, such as capital gains taxes, that may significantly reduce the value of the asset in question. Consequently, spouses should always carefully assess the true worth of an asset before pursuing it.
4. Getting caught up in conflict
Although divorce can introduce painful emotions and acrimonious feelings, spouses should try to avoid engaging in needless conflict. This can increase legal costs and reduce the total amount of money left to be divided, as The Wall Street Journal notes. Fighting needlessly can also distract spouses from pursuing a fair, reasonable settlement. If feasible, spouses may even benefit from exploring economical alternatives to litigation, such as reaching a settlement through divorce mediation.
5. Forgoing legal assistance
Finally, many separating spouses may try to handle the divorce process themselves to keep legal expenses minimal. However, self-representation can open the door to legal and financial missteps that could easily have been avoided. Therefore, spouses should carefully weigh the potential costs of an adverse settlement against the immediate cost of seeking legal assistance.
Before ruling out the option of legal representation, spouses divorcing in Colorado should at least consider consulting with an attorney. An attorney may be able to provide advice regarding the relevant state laws and legal strategies that may help a spouse protect his or her financial interests.