16 May 2019

Four Financial Mistakes People Make During Divorce

Divorces can get very messy, especially if one party is financially dependent on the other. Although one can never guarantee an affordable and peaceful divorce process, it is possible to safeguard yourself against some of the most common mistakes people make when getting divorced. Here are four of the most common financial mistakes couples make when getting divorced.

1. Calling your lawyer friend

Failure to consult with a specialised family lawyer can lead to acrimony. This is not the time to ask for favours from friends. In most cases, although your lawyer friend might have very good intentions, they are still human and therefore cannot always guarantee objectivity. Asking a friend for some legal advice may seem like the most cost-effective option, it may end up costing you more money in the long run. To be safe, the only advice you should be asking your lawyer friend is for a referral. The last thing you want is for the divorce to become litigious and costly due to bruised ego’s or friends picking sides. Seek the assistance of an objective family law attorney to give you unfiltered, unbiased and practical advice before asking friends or family to help you with your divorce.

2. Not considering alternatives to litigation

Everyone knows that litigation can be very expensive. There is simply no reason why couples should not attempt the non-adversarial route of mediation before they consider litigation. The mediation process is not only cheaper and faster, but it is also more inclusive which means fairer results for both parties. We always recommend that a couple attempt 2-3 sessions of mediation before approaching an attorney. At the very least, the parties would have identified the contentious issues during the mediation process which would enable them to properly instruct their attorney should mediation fail.

3. Thinking you can hide your money from your spouse instead of pursuing settlement

Whether you are hiding behind a trust or donating money, if you are trying to hide money from your spouse, you better saddle up for a pretty large legal bill. There is always a paper trail and the discovery process in divorce litigation will bring you to your knees. Family lawyers deal with these kinds of tactics every day and we know exactly where to look. Instead of wasting time and money on trying to hide money, rather spend time on figuring out what your spouse actually needs or wants. Proposing reasonable settlement is certainly not admitting defeat, rather a bold gesture that may soften your spouses’ approach. Many couples end up settling on a “bad deal” after spending thousands on legal fees to protect their money from their spouses.

4. Forgetting about costs

One of the most important considerations that are usually overlooked is the costs involved with splitting matrimonial property. It is always best to seek financial advice from your accountant regarding tax implications (especially on pension pay-outs), transfer duty fees, bond cancellation fees, agent’s commission and legal fees.