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Common mistakes during divorce have major financial impacts

Divorce can be a financially overwhelming process, and, if people make mistakes, they may find the process to be even more expensive. There are several financial mistakes that are commonly made during the divorce process in New Jersey and other states. Avoiding these mistakes may help to limit the financial pains associated with divorce.

First, it is wise for people to divide their finances early in the process. For instance, they can open their own bank accounts, allowing them to keep their future incomes separate. They may also want to pull a credit report in an effort to uncover and unlink any joint debts. As the divorce moves forward, it is important to update titles and deeds to accurately reflect which person owns what separately.

Another major mistake involves raiding retirement funds. People going through divorce may be tempted to tap their 401(k) or IRA accounts in order to fund divorce-related bills or pay off any joint debts. However, this will only worsen a person's chances of being ready for retirement, with only nearly 50 percent of households having enough savings for their golden years.

Two divorcing individuals in New Jersey may be able to find common ground when it comes to matters such as property division and asset distribution and, thus, avoid divorce litigation. Otherwise, a judge will ultimately determine how their assets will be split. An applied comprehension of the law may help people to fully understand their rights, which will allow them to fight for their fair share of assets during the process of divorce.

Source: cnbc.com, "Breaking up is hard to do: Protecting assets in divorce", Kelli B. Grant, Jan. 17, 2016

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