Many New Jersey couples who get a divorce may be dealing with issues such as property division, alimony and child support. There are a number of common financial mistakes people tend to make around these issues that can be easily avoided if they are aware of them.
It is important to make sure the true value of assets is correctly calculated. For example, a person may decide to keep the home because it is worth the same amount as an asset such as a retirement account. However, in calculating that value, it is important to take into account that there will costs associated with maintaining the home. Furthermore, a person must be able to maintain the home on one income.
Other mistakes may revolve around a 401(k). If a person keeps a 401(k) that has the same amount of money in it as a checking account, it is important to remember that withdrawals from the 401(k) are taxed. If a 401(k) is divided, it is necessary to get a qualified domestic relations order. This prevents penalties on a withdrawal that must then be rolled over into an individual retirement account.
A person who receives alimony or child support may want a life insurance policy on the ex-spouse. This offers financial protection if the payer dies.
Many couples prefer negotiating property division instead of having the decision made by a judge. Couples may want to go through divorce mediation to reach an agreement. This is a more cooperative approach than litigation. Even high-conflict couples may benefit from mediation and might come to a satisfying agreement. Each party is entitled to legal representation during the process.