People in New Jersey who are going through a divorce might make some financial mistakes that can cause the process to be even more stressful. Awareness of common mistakes can help people avoid them.
For example, some people might go out and buy a big-ticket item during or after the divorce. This feels good in the moment, but the bills will come in. Some financial planning may help a person make better decisions during and after the divorce, and a professional could help with this. This planning may help people avoid mistakes such as keeping a home they cannot afford or quitting work to avoid alimony payments.
Another common mistake by people who are not keeping a close eye on their finances is liquidating assets to pay for the divorce or other debts. The problem with this strategy is that it can end up being costly if taxes are involved in selling assets or taking distributions. Some couples may have a 401(k) to split. They will need a document known as a qualified domestic relations order, and the distribution will need to be rolled into an IRA to avoid penalties and taxes.
Couples should be aware that starting with divorces finalized in 2019, it will no longer be possible to deduct alimony payments from taxes. Payments will not be taxable either.
Some couples prefer a collaborative divorce to going through litigation and battling over property division and child custody. While negotiation requires the cooperation of both people and is not always possible, couples may find that it costs less and that they are more satisfied with the outcome than one decided by a judge. A collaborative divorce may help ensure that both people are financially stable after the divorce and that a custody decision is reached that suits both parents and their children.