Divorce is often a time of upheaval and great emotional stress during which spouses are expected to make a series of important financial decisions. The choices made during alimony and property division negotiations can cast long shadows, but divorcing couples in Tennessee who approach these matters dispassionately and listen to the advice of their attorneys, accountants and financial planners may be able to avoid some common pitfalls.
The tax implications of divorce are often overlooked during heated negotiations over assets. Retirement accounts are sometimes plundered to get the money needed to secure a quick settlement, but few experts would suggest doing this as it can leave people financially unprepared for their golden years and facing stiff IRS penalties. Taking retirement benefits upfront after obtaining a qualified domestic relations order can also be a mistake when it pushes people into a higher tax bracket and increases their overall tax bill.
Negotiations over alimony can be particularly acrimonious, but quitting a job simply to avoid sending a monthly check to a former spouse is a decision based on emotion rather than logic. In addition to losing their paychecks, people who take this path generally find themselves embroiled in bitter and ruinously expensive legal disputes that they have little chance of winning. Couples who are currently facing the end of their marriage should also be aware that the rules regarding the tax deductibility of alimony will change for divorces that are not finalized before the end of 2018.
Experienced family law attorneys may understand the pressure that divorcing spouses are under and their desire to put the process behind them as soon as possible. However, attorneys could also remind their clients that decisions made in haste often have profound consequences. To avoid this kind of mistake, attorneys may study asset and investment portfolios closely and call on financial advisers when questions arise over the most prudent course of action.