Transcription:

Margie:  Expensive and there’s a good chance that your price of living is likely going to go up when it’s all said and done. Jonathan Marks with The Marks Law Firm here this morning on how you can plan in advance to make some good decisions. Good morning to you.

JM:  Good morning Margie.

Margie:  Ya and you’ve broken this down into six mistakes that you see happen a lot with people going through a divorce and the first one is overlooking your assets.

JM:  So a lot of times when you’re going through this process, usually it’s a first time you’re going through this process, and you’re really hyperfocusing on things that you think are important to you. So at the beginning of your case, when you’re sitting down, you’re starting to put together your financial plan, what we call it a statement of property to give to the court, you’re really looking at it just from your own perspective and you’re really remembering I have these bank accounts in my name or I have these particular retirement accounts or credit cards and sometimes you forget about the fact that your spouse may have a pension that goes with their 401K or they may have had some store charge cards that you didn’t think about because you’ve never used. And as a result of it, when you get towards the end of the case, you kind of forget about the fact that maybe you left an asset on the table or even worse that you didn’t really inform your attorney to think about hey there may be some additional debts out there that I didn’t think about. And a credit card debt that ends up being in joint name could really hurt you down the road when you’re applying for you know other credit for a new car or you know some form of a mortgage.

Margie:  Likely, the biggest asset is the home.

JM:  Sure.

Margie:  So keeping the home and there’s a lot of questions surrounding this.

JM:  Right, ya so most of the time people are really thinking about the fact that they want to maintain their standard of living. Sometimes, it’s just based upon the fact that change is very difficult and going through a divorce is a huge change in their life. Sometimes it’s just focusing on trying to maintain the kids within the household. And what they don’t think about is the fact there’s a lot of financial consequences that go with it. The home itself may have some equity in it that you’ll have to pay out to your spouse or the home may be to a point where you may not qualify for that refinance. So when you really sit down and you think about it’s, the upfront decision is really trying to think about A) can you afford the home. And it’s not just that you can purchase the buyout of your spouse but you know the monthly expense that goes into it isn’t just the mortgage. You have to think about what your real estate taxes are going to be, your your insurance is going to be, what’s the monthly upkeep going to be for that purpose as well. And then you know in the long run, do you think about is this something you can afford six months, one year, two years down the road. And if the answer is no you really need to think about that upfront instead of going “Why did I do this?” two years later and putting yourself into a financial burden.

Margie:  The third money mistake, underestimating your expenses.

JM:  So, eh you know it’s another way to look at starting with the home, which is your biggest monthly expense, it usually takes about a third of your income away each month. You also then have to think about living on a single income versus a dual income or two households versus one household, you really have to think about what those expenses would be just for yourself. And a lot of times, individuals underestimate what they think they’re going to be able to afford and they they believe that they’re going to be able to make it and they end up adding into credit card debt or having to dig into retirement assets that have taxable consequences. And as a result of it, you really need to have a lot more forethought into that financial planning so you don’t put yourself into a financial burden.

Margie:  Uh huh. Alright and the fourth one, I know you’re always saying to keep the emotion out of it, is seeking revenge.

JM:  Right. So, a lot of times somebody is going into this situation for the wrong reasons and they believe that when they get to court somehow that judge that knows them just for a period of hours is going to be able to provide them some sort of emotional relief that just isn’t available within the court system. It’s true that you may have some form of the misconduct coming out that you’re really pursuing and you may have some form of an offset within the property but you’re not going to have that revenge factor of what you think. The only thing you’re going to end up doing realistically is you’re going to rack up a lot of attorneys fees, you’re going to rack up a lot of emotions that’re going to make it very difficult for you to co-parent down the road and as a result of it, the only thing you’ve done is erode that marital state both from a financial you know standpoint and also from an emotional standpoint from your children.

Margie:  Yea. The fifth thing is forgetting about taxes.

JM:  So that’s that’s a huge aspect of it.

Margie:  (laughs)

JM:  So you know back to the home you have that aspect of you know do you get a taxable benefit of writing off the mortgage interest, the real estate taxes every year. The other thing is when you divide the assets, when you’re looking at cash, it may not have taxable consequence other than some interest that you may have accrued. In today’s world, not very much on cash. But if you’re balancing things in regards to receiving stock accounts or you’re planning on liquidating some form of a retirement account, those have serious taxable consequences that you really have to prepare for. So just because the sum that you think you’re receiving is x, it may not be after you pay the taxes on it and you may end up really having a net result that’s much less.

Margie:  And the sixth and final is thinking the work is done.

JM:  Yea, it’s never done.

Margie: (laughs)

JM:  It just isn’t. And at the end of the case you have to think about the fact that with the credit cards for example, did you go and close those joint accounts. If you had a will and a trust where you left your spouse as the individual receiving things or they were your power of attorney if you were to get ill and had that health care authority. You know these are the things you need to go back with and have a checklist with your attorney at the end of the day and make sure you’ve covered all your bases so you really have separated yourself not just from a legal standpoint but from all those other things that may be hanging out afterwards.

Margie:  Some great advice for us this morning. Family law attorney Jonathan Marks, thank you so much. We appreciate it.

JM:  My pleasure Margie.

Margie:  Alright, for more information on The Marks Law Firm, just head to stlmoms.com.

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