Oklahoma couples who are splitting up should be aware of common financial mistakes that are made during a divorce. For example, some exes might be tempted to try to make themselves feel better by spending money. However, this is likely to backfire when they have to pay the bills.
Another mistake is liquidating assets to pay bills. This could incur taxes, and it could also affect a person’s financial plan. In fact, creating a strategy may be one of the best ways to avoid financial mistakes. With a financial plan, an ex might also realize that the mortgage and upkeep of the home are too expensive to manage on one income.
Some people may not know that taking a distribution from a 401(k) may incur taxes and penalties. For a one-time distribution during a divorce, couples can use a document called a qualified domestic relations order, and the distribution can be rolled into an IRA to avoid these taxes and penalties.
For divorces finalized after Dec. 31, 2018, there will be no tax implications around alimony. This means that those with spousal support obligations will no longer be able to deduct the payments on their taxes. Taking steps to avoid support obligations such as quitting a job is not a viable long-term solution.
Spouses considering separation may be uncertain how property division will go and what their financial life might look like after divorce. An attorney could help explain likely scenarios and come up with a plan for negotiating property division. Negotiation can be quicker and less expensive than litigation, and it allows the couples more say over the outcome. However, if one spouse is uncooperative, negotiations break down or the couple agrees on some points but not others, going to court might be necessary.