Divorcing couples in Ohio and around the country often hope to get through property division and spousal support negotiations as quickly and as painlessly as possible, but going into these talks unprepared can lead to problems in later years. People who have grown accustomed to pooling their incomes to cover their monthly bills can find it difficult to maintain a comfortable lifestyle on a single paycheck, and debts that are divided may become thorny issues if payments are not made on time.
When spouses decide to divorce, they usually account for monthly costs like rent, utilities and car payments when they calculate the costs of living alone. However, they often overlook equally important obligations such as health insurance and retirement savings. Another common divorce misstep is cashing out and dividing IRA and 401(k) accounts. While doing this can provide people with cash while they transition into a new lifestyle, it can also lead to higher tax bills.
Debts can be included in a divorce settlement just like assets, but lenders are not bound by the terms of these agreements. This means that a person may be pursued for payment of debts that were used to purchase assets that he or she ceded in property division negotiations. Failing to make these payments will usually damage credit ratings and make future borrowing more difficult.
Experienced family law attorneys may cover these issues during initial consultations, and they may call on financial planners or retirement experts to provide advice about complex money matters. This kind of input can be especially beneficial when a family-owned business is involved or spouses have elaborate investment and retirement portfolios. Attorneys could also suggest that divorce settlements stipulate that all jointly held debt should be either paid off or refinanced under a single name.
