1. Don’t hide assets.
However tempting it can be, if you’re caught the penalties you may face and the associated costs of going to court and attorney’s fees may add up to more than what you would have paid had the asset just simply been divided. Truthful financial disclosure in divorce is in your best interests.
If you suspect your spouse is hiding income or assets, let your attorney know right away. Hints that your spouse is hiding assets include taking large cash withdrawals from accounts, setting up separate bank accounts or offshore accounts, giving money to a relative or a friend to hold, or even secretly buying expensive art or jewelry that will be sold later for cash.
If you suspect your spouse is hiding assets, you can request something called a “forensic analysis” or a “lifestyle analysis” that will create a detailed picture of your marital finances that can help reveal anomalies.
2. Carefully consider tax consequences.
When you divorce and you receive certain assets, you may be taxed on distributions, so pay close attention to how the asset will affect your taxes. For example, if a tax-deferred retirement account is liquidated and the cash it contained distributed, depending on certain factors you may need to pay taxes on that money when you go to file your taxes. Depending on the amount in your settlement, this can be a tax hike that you were not expecting.
Alimony can also impact your taxes. If you pay it, the support is tax deductible. If you receive it, alimony counts as taxable income. If you’re being offered a high monthly support award, take a look at how much this will require you to pay in taxes. Do you actually require a greater alimony award to offset the tax burden?
3. Don’t make decisions based on emotions.
Agreeing to terms such as alimony or division of assets and liabilities, just to get away from a person or just to be with somebody else, can have devastating effects on you financially. When you let anger take over, suddenly matters that could have been negotiated end up needlessly in court where a judge will decide rather than the parties being able to work it out between themselves.
Ultimately, when divorce is viewed in more of a businesslike way, the process becomes less rocky and is easier to handle in a discreet way. In the end, this will save time, money, and stress. This means that you will be able to walk away from your divorce with more wealth, not less.
Bari Zell Weinberger is the owner and managing partner of Weinberger Law Group in New Jersey. She is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney.