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| Money and Assets Not All Assets are Equal When you are deciding on what assets you and your spouse will take, you should be aware that not all assets are equal. One of you may end up with a huge tax bill when you access the assets; for instance, you could end up paying capital gain taxes upon the sale of your home or your investment assets. In addition, if you dip into your retirement assets, you may end up paying income tax and a penalty. Other assets may
end up being a money pit. Your primary residence, vacation home, or rental
properties could cost you a significant amount of money to maintain. Frequently,
the primary benefit of a rental property is not necessarily cash flow, but the
tax losses that are generated. If you are in a low tax bracket, then these
losses may not benefit you to the extent that another
The Family Home Reducing expenses may mean selling the family home and downsizing to a smaller home. Do you really need a million-dollar family home? Keeping up appearances could cost you a comfortable future. By selling the million-dollar home, you could increase your cash flow I two ways; decreased costs, and additional funds to invest. If there is no mortgage on the house, you would be able to buy a smaller house free and clear and still have funds left over to invest and increase cash flow. Choose Your Battles You can go broke during property division if you insist on fighting over every last item. For example, let’s say you purchased a leather desk-accessories set that included a matching leather umbrella stand. If your husband wanted the umbrella stand, but you insisted that the set would be incomplete without it, you’d end up having a major battle over this item. In the meantime, the clock is ticking with your attorney and before you know it, you’ve added another $5,000 to your attorney’s fees. Does this sound ridiculous? Yes, however, this kind of thing happens every day in divorce court. Emotions are running high, and some people will fight “to the dearth” over truly trivial items. Sometimes, they’re more concerned with making sure their ex-spouse doesn’t get something than with actually getting it themselves. One must look at the big picture. Is the item really worth fighting over? Can you purchase a new one for significantly less than you would have spent in attorney’s fees? Not only are you wasting money, you are also increasing the ill-will between you and your soon-to-be-ex. If you have children, this can take a real emotional toll on everyone. Here’s the real truth for you: no one gets everything they want in a divorce settlement. You will have to give up some possessions you really like—maybe even some heirlooms-so prepare for this by creating a short list of “Must-haves”, a longer list of “Would-Like-To-Haves”, and a third list of “Don’t Wants.” Don’t tell your ex you don’t want the items on this third list; instead, “gracefully” offer to trade them for the items you really want. Be prepared to give us some of your “Would-Love-To-Haves” in exchange for more of your “Must-Haves.” Forgettable Assets Some assets are
easy to forget, such as pensions, stock options from an employer, accrued sick
and vacation pay, the actual
Credit Rating and Debt It is imperative to protect your credit rating. Here are some tips:
A vindictive or spendthrift ex-spouse can incur debt on your joint accounts and destroy your credit rating during the divorce process. If you’re not able to pay off a joint account in full, ask if you can maintain a balance on it after it’s been closed. Your credit report will help you discover any outstanding debts that need to be addressed as part of the divorce process. It may be best to pay off joint debts with marital assets, and then each spouse can move forward with a clean slate. Once your divorce is final, you should use your credit cards sparingly. If you need to establish a credit rating, make sure to pay off all balances on time every month. If you need to use credit for short-term liquidity, then you may be better off refinancing your home and avoiding maintaining a balance on your credit cards. In the U.S., the benefits of refinancing your home included deductibility of interest and a lower interest rate. You will need to qualify for the mortgage, but spousal and child support are generally included as sources of income to permit a non-working spouse to qualify for a mortgage. Back to Work or School? You may have to go back to work to supplement your support payments. If you don’t go back to work now, do you want to wear a fast-food restaurant uniform when you’re in your 60’s and 70’s? Your property settlement assets should be kept for your retirement. You have to be realistic about any career changes you make. What are your prospects at your current job? If you go back to school, what can you realistically expect to earn? Will your degree improve your earning capacity? Are you taking courses that will help you secure a position in a growth industry that needs qualified workers, or are you just taking a course because it interests you? Does your chosen career or course of study take advantage of your natural strengths, abilities, and interests? Taking courses you hate to secure a job you’ll hate is not a wise use of time or money. Work with a career counselor or personal coach to figure out the pros and cons of staying put or changing directions. The Bottom Line Your lifestyle will change after your divorce. You will have to make some sacrifices. However, if you plan ahead, these sacrifices will prepare you for a prosperous future.
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investment would. Your
expenses may actually increase. For example, if your spouse used to make all
repairs, mow the lawn, etc., but now you have to hire someone to do those
things, then your expenses will increase. Would you be better off liquidating
these properties and investing the proceeds in something that would increase
your cash flow instead of creating a financial drain? 
value of insurance policies, frequent-flyer miles,
prepaid dues (such as annual country-club dues and season tickets or passes),
and timeshare properties and vacation clubs. These should be addressed as part
of the property settlement. In many cases, pensions can be worth more than
houses, so make sure you have a qualified financial professional value these and
other assets before you sign away your rights to them.