What You Want in Divorce, is Not Always What You Need
Going through a divorce may be the most life changing event most people will experience. In an effort to maintain a measure of stability there are aspects of your previous life you try to hold on to, but are these really the best decisions in the long run?
Keeping the House: It’s where your kids grew up, it’s your safe place and you really want to keep it, but should you? You’ve been offered $100,000 of equity in your house while your ex is getting $100,000 of the money market account - seems reasonable, but is it? Saving the stress of moving is always helpful, but being house poor isn’t. What if the housing market falls and you need to sell the house but can’t? What about the carrying costs? Do you have the money available to buy a new air conditioner? New roof? Pay HOA dues? Do you have the time and energy to keep up the yard? the cleaning? the painting? Are there hidden tax consequences of keeping the house? If you fight for the house, you will have to give up other assets that may benefit you more post-divorce.
Business: Part ownership in a business is another tough decision that needs to be evaluated objectively from all angles. You spent your blood, sweat and tears building a somewhat successful business and you are not ready to just hand it over. Do you have other resources available? Can you come out as the sole owner, or will you have to continue a relationship with your ex? Is the business already producing enough income to support your family? A business can be a very illiquid asset, if you are going to need cash in the future, you may be forced to sell at a lower price. Is the business subject to economic cycles? How will the pandemic affect its success going forward?
Personal property: Pride is a powerful emotion, and one that can be a strong motivator, but it can also be very deceitful. Make sure that you have a sincere interest in the item in question. Not only are you racking up attorney bills and court costs in excess of what the item is worth, but refusal to compromise will often create increased animosity with your ex that may bite you later.
Divorce is a tricky journey, where you may not only have to give up your spouse, but also some of the items you treasure. It’s normal to resist change but you need to be realistic about your finances and not let emotions dictate. As a rule of thumb, If getting an asset today will cost you money in the long run, you should consider letting it go. A Certified Divorce Financial Analyst® can educate you on the pros and cons of each decision. We can show how the financial decisions you make today will affect your future.
Please note: This post does not provide legal advice, it is for informational purposes only.