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Mistakes that can derail your divorce

Generally, when most people marry, they do not have divorce in mind at the moment they say "I do." However, divorce is very common in Canton and throughout the rest of the country. Like with most tasks, there is a right way to divorce and a wrong way. For example, posting on social media about a big raise you are getting, the lavish vacation you took or simply trashing your soon-to-be ex-spouse can cost you big time when you sit down at the negotiation table.

Not only can oversharing on social media cost you, but there are various other things that can hurt you in the divorce process. Here are a few mistakes that might derail your divorce.

Missing paperwork

When it comes time to start dividing marital assets, it is vital to have a complete picture of what you and your spouse own. Depending on the extent of your holdings, this could include bank account statements, Social Security statements, pay stubs, mortgage documents, property titles and even receipts for home improvements. If you are not sure where to start, begin with prior year tax returns. This is a great place to find out about assets that are producing income so that you can include them in that big picture of your financial standing.

Not considering tax consequences

While you do not have to report the share of the settlement you walk away with after your divorce, this does not mean there will not be tax consequences further down the road. For example, if you fight for the traditional IRA, keep in mind that when you begin receiving distributions from this account, they will be taxable income.

In addition, if you insist on keeping certain property, such as the primary residence and you sell it in the future for a gain, it could also be taxable income. At the moment, a married couple can exclude up to $500,000 of gains from the sale of a primary residence but, if you sell it after the divorce, you will be limited to an exclusion of only $250,000.

Not closing joint accounts

Do you have joint credit card accounts or other jointly owned debt with your spouse? Do you fully trust them to make their share of the payments after the divorce? Even if they promise to take full responsibility for the debt, do you truly want to take the chance that they will default?

If your name is still attached to the debt, the creditors will come calling if they default. Creditors do not care if you are divorced or if the settlement assigned that debt solely to your ex. If you are divorcing, take the time to close joint accounts and remove your name as an account holder from any debt that your ex is assuming 100 percent.

If you are planning to divorce, it is important that you avoid the above mistakes. In order to fully protect your interests, take the time to find out what actions you should take and which ones to avoid before you even begin the divorce process.

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