Welcome to the fortieth episode of the Divorce and Your Money Podcast. Shawn Leamon, MBA and a Certified Divorce Financial Analyst, discusses the top five financial mistakes attorneys make when drafting the divorce settlement.
A good divorce attorney is not only an expert in law but also an expert in the financial issues that arise in a divorce. Some attorneys could make mistakes, however, which would have serious negative implications for you in the future. These mistakes include:
- Not determining the correct value of assets
- Dividing investments poorly
- Failing to look for hidden assets
- Not considering tax implications
- Not developing a post-divorce financial plan
Sometimes so many things are going on with the divorce and settlement that determining the correct value of assets can become a secondary concern, which could lead to a serious loss if assets are missed. An attorney must make sure that the value of all assets is estimated properly.
The second mistake that attorneys sometimes make is not understanding how to divide investments. This subject can be complex, as there are many types of investments. A financial professional can be a better guide than an attorney in such cases.
Issue number three is failing to search for hidden assets, and sometimes attorneys fail to locate them. In the case of a business, for example, assets could be hidden or inflated in many different ways. A forensic accountant would be of great help in such situations.
Mistake number four is failing to consider future tax implications, which could cost you greatly and even prevent you from accessing funds, such as those in a retirement account. You need to have someone calculate the tax implications for you so that you don’t suffer in the future.
The most overlooked and critical mistake made by attorneys is failing to develop a post-divorce financial plan. You should not look for someone to make a post-divorce financial plan after your divorce; instead, you need a financial analyst during the divorce to help you as early in the process as possible.
Key Learning Points:
- A good divorce attorney is not only an expert in law but also an expert in the financial issues that arise in a divorce.
- Attorneys can make financial mistakes that can cost you greatly in the future.
- Mistakes include not determining the correct value of assets, dividing investments poorly, failing to look for hidden assets, not considering tax implications, and not developing a post-divorce financial plan.
- You need a financial expert on your team to guide you and your attorney so that they don’t make any such mistakes during your settlement.
- You need a financial analyst during the divorce to help you develop a post-divorce financial plan.