Divorce in New York, including New York City, Nassau County, and throughout Long Island, involves critical financial decisions that can have a considerable impact on your long-term financial stability. However, when you begin this process, you’ll find that there are several critical legal and financial decisions to make. It’s incredibly important to understand the most common financial mistakes made during divorce to help ensure you can set yourself up for financial success when the process is done. The following blog explores what you should know about the most frequent errors, how to avoid them, and the importance of working with a Long Island divorce lawyer during these difficult matters.
What Are Common Financial Mistakes Made During a Divorce?
In New York, the most common financial mistakes those going through the divorce process often make include rushing important decisions, failing to accurately calculate income and expenses, overlooking asset liquidity, and allowing their emotions to dictate the decisions they make.
If you are going through a divorce, one of the most common mistakes that can impact your finances is rushing through matters. Though you may be eager to get everything finalized and put this chapter of your life behind you, failing to carefully complete steps can have negative consequences. For example, when you and your spouse must calculate your expenses to determine the standard of living for matters like alimony or child support, failing to take the time to make these considerations can result in lower payments than what you actually deserve, or overpaying, which is an unfair financial burden on one party.
Another error that can negatively impact you is failing to properly budget for your new cost of living. Undoubtedly, you’ll incur different expenses as a single adult than you would as a married couple with intertwined finances. As such, it’s in your best interest to take the time to carefully consider how much you can spend on certain expenses, especially when living in New York City or in Nassau County, where the standard of living tends to be higher. It’s also critical to ensure that you take other costs, like healthcare premiums, car insurance, and utilities, into consideration, as these are often forgotten. Thorough budgeting can help set you up for financial success following the dissolution of your marriage.
Most Common Financial Mistakes in New York Divorces
- Rushing through the divorce process without fully evaluating the financial decisions
- Failing to accurately calculate income, expenses, and the established standard of living
- Failing to create a realistic post-divorce budget to account for recurring expenses
- Overlooking asset liquidity, such as choosing real estate over cash
- Allowing emotions, including sentimentality and anger, to influence financial decisions
- Failing to review financial documents like tax returns, bank accounts, and business records
- Failing to understand how equitable distribution impacts the division of assets in New York
How Does Equitable Distribution Impact Finances in New York?
New York, including Long Island, adheres to equitable distribution laws. This means that marital property is divided fairly, not evenly. While it is possible for the court to award both parties an even share of assets, this is not the automatic standard. As such, the court will consider a number of factors when determining how assets should be divided, ultimately impacting your financial outcomes following a divorce.
Important Equitable Distribution Considerations
- Each spouse’s financial and domestic contributions to the marriage
- The length of the marriage
- Each spouse’s financial situation
- The future earning potential of each spouse
- Ownership of assets vs. marital property
- Tax consequences
- The need to maintain stability for children, if applicable
Why Asset Liquidity Matters in Divorce Settlements
It’s important to understand that not all assets hold the same practical value. While some assets may appear more significant on paper, they may not have any immediate financial benefit following a divorce.
Common Asset Liquidity Mistakes
- Choosing to keep the marital home without sufficient or consistent income to support mortgage payments, utilities, or property taxes
- Accepting a retirement account without considering the penalties or access restrictions
- Overlooking the maintenance expenses associated with significant assets
- Failing to balance long-term assets with short-term financial needs
How Can Emotional Decisions Impact Your Finances?
Divorce is an emotional process. However, allowing your emotions to guide your financial decisions can result in considerable mistakes that impact your long-term financial stability.
Emotion-Driven Mistakes to Avoid
- Attempt to cause financial harm to your spouse out of anger or revenge
- Overspending and accumulating debt during the divorce process
- Making impulsive decisions regarding asset distribution
- Refusing reasonable settlements out of spite or in the hopes of making the process more difficult for your spouse
- Ignoring the long-term consequences in favor of short-term emotional satisfaction
Can an Attorney Help Me Protect My Finances?
You may be surprised to learn that one of the most common financial mistakes made during a divorce is foregoing the guidance of an attorney. Unfortunately, many who file for divorce believe they can do so without legal representation. While there is no law that states those divorcing must have legal representation, it is in your best interest to seek guidance.
When you file for divorce, there is a litany of important financial and legal matters that must be decided. If you are unfamiliar with your rights, you may make an error that can negatively impact your finances for years following your divorce. For example, without discussing the matters with an attorney, you may not know that you are entitled to a certain asset, or you may end up receiving significantly less alimony than what is fair. However, by working with legal representation, you can have the best chance at a favorable outcome.
Contact an Experienced New York Divorce Attorney Today
Whether you are filing for divorce in New York City or on Long Island, the team at Barrows Levy, PLLC, is ready to represent you. We understand how difficult these matters can be to navigate, which is why we are committed to doing everything in our power to help you make the best decisions to help you begin the next chapter of your life on the right foot. Contact us today to learn more.
