When you’re getting divorced, odds are you put a lot of time into thinking about your assets. You need to split them with your spouse — soon to be your ex — and you don’t want to lose out. You don’t want to make a mistake that costs you thousands of dollars. You know how easy it is.
If you’re already thinking about this, that’s a good sign. People often make divorce mistakes that they don’t comprehend until later. They regret it, but it’s too late. Instead, you want to make yourself aware of these mistakes in advance so that you can avoid them up front.
One thing that is important to avoid is undervaluing the things that you own. The division of cash assets is one thing; it’s not hard to split the money up properly. You see the exact numbers from the beginning. With other types of assets, though, things can get tricky.
For instance, maybe you own a home. Do you know what you paid for it? If it was 10 years ago, you may know the ballpark figure, but you need to get the paperwork so that you understand the exact cost.
Even then, the home may not be worth anywhere near what you paid for it. Maybe you bought it for $250,000 when the market was down. That’s fine, but maybe the market recovered after the purchase. It’s now a $500,000 asset.
Don’t think of it as $250,000 or you could accidentally short yourself when dividing things with your ex. Maybe they take the home and you take other assets of the same value — a retirement fund, a car, an investment portfolio, etc. The amount of assets you claim literally doubles with the value of your house.
On top of that, you need to know what your mortgage looks like today. In the above example, you have been paying it off for the past 10 years. On a 30-year-mortgage, you’re only a third of the way done. Even on a 15-year-mortgage, you’re just two-thirds of the way through it. If you sold the house, you wouldn’t get that $500,000. You’d have to pay off the mortgage and keep the remainder. After getting a home appraisal done, do not assume that the value of the house is the real value of that asset to you.
Plus, with a home, you have to consider your plan moving forward. You don’t want to stay on a mortgage with your ex. You probably need to refinance on your own, and that costs money.
Asset division often gets more complicated than people realize. To avoid serious mistakes, make sure you know exactly what legal options you have.