Separation or divorce is a time when both of you should reduce your spending and make an effort to live within your individual means. For instance, if you’re not working, can you really afford the country-club dues or fresh flowers every week? When you are deciding on what assets you and your spouse will take, you should be aware that not all assets are equal. One of you may end up with a huge tax bill when you access the assets: for instance, you could end up paying capital-gain taxes upon the sale of your home or your investment assets. In addition, if you dip into your retirement assets, you may end up paying income tax and a penalty.
Other assets may end up being a money pit. Your primary residence, vacation home, or rental properties could cost you a significant amount of money to maintain. Frequently, the primary benefit of a rental property is not necessarily cash flow, but the tax losses that are generated. If you are in a low tax bracket, then these losses may not benefit you to the extent that another investment would. Your expenses may actually increase. For example, if your spouse used to make all repairs, mow the lawn, etc., but now you have to hire someone to do those things, then your expenses will increase. Would you be better off liquidating these properties and investing the proceeds in something that would increase your cash flow instead of creating a financial drain?
Reducing expenses may mean selling the family home and downsizing to a smaller home. You can go broke during property division if you insist on fighting over every last item. Emotions are running high, and some people will fight “to the death” over truly trivial items. Sometimes, they’re more concerned with making sure their ex-spouse doesn’t get something than with actually getting it themselves. You have to look at the big picture. Is this item really worth fighting over? Can you purchase a new one for significantly less than you will spend in attorney’s fees? Not only are you wasting money, but you are also increasing the ill-will between you and your soon-to-be ex. If you have children, this can take an emotional toll on them.
Here’s a hard truth for you: no one gets everything they want in a divorce settlement. Let us help you save money. Contact the Justice Legal Group at 505-880-8737 or email us at info@JusticeLegalGroup.com.