Divorce can have a dramatic effect on a Minnesota couple’s finances. This is especially true for those who make the wrong decisions. While it might be something that people will want to leave to their attorney or financial professional, it is important for them to make sure they understand all the implications and consequences of their decisions.
One of many financial mistakes to avoid is keeping a home that is no longer financially feasible. When one household splits into two, there is less money to go around. With only one income to maintain the residence, the budget becomes very tight. Another mistake is accepting the house as opposed to liquid assets. Brokerage accounts may have a valuation equal to the house, but they also have no overhead and no expenses. The house comes with a multitude of expenses for upkeep, and after the bills are paid it may seem like the short end of the stick.
Many people do not understand the tax implications of the different assets when they get them in the divorce. Since 401(k) plans have tax consequences when money is withdrawn, a checking account of the same value would be a better option. Another mistake is not getting a qualified domestic relations order when a 401(k) plan is being divided. The absence of one could cause the division to be a taxable event.
These are just some of the divorce legal issues that can arise. People who are facing the end of their marriage might find it advisable to have the representation of an experienced family law attorney when negotiating an overall settlement agreement.