The top 5 mistakes people make in a divorce that cost them thousands
The average cost of a divorce in the US is a staggering $11,300, with lawyers' fees making up the bulk, according to personal finance site The Motley Fool.
However, a marriage split is not just a one-off expense; there are often long-term implications too.
Many women in particular are at risk of ending up worse off after divorce – especially if they have taken time off work to raise a family.
Yet both men and women can end up regretting financial mistakes made during the sound and fury of splitting up.
'People making such mistakes often regret it long term, because they can be irreversible,' divorce lawyer Bari Weinberger told the Wall Street Journal.
Experts argue it is important to be prepared and ensure you are completely informed about your financial situation.
These are the top five mistakes they urge those embarking on a divorce to avoid.
1. Heavy spending
One of the most common mistakes new divorcees make is splurging right after the papers are signed.
Some take their settlements and throw a 'divorce party', or indulge in retail therapy after months or even years of acrimonious legal wrangling.
Common post-divorce purchases include new cars that become unaffordable on finance plans.
Another mistake is rushing to buy a new home too quickly, according to divorce coach Liza Caldwell.
Caldwell tells her clients to wait for their lives and especially their finances to stabilize before buying a new property.
Caldwell told the Journal that those rushing a fresh start can end up overpaying, or tie up too much of their money in their home while reducing flexibility elsewhere.
However, costly spending mistakes can also occur just before a marriage fails.
Weinberger warns that committing to expensive vacations or new joint debts such as a mortgage on a new home can complicate their process of dividing marital assets during divorce.
2. Hidden assets
Some spouses will hide assets before they ask for a divorce in order to gain more from the overall settlement.
A common tactic is giving money to friends and family on the understanding that it will be returned after the divorce is settled.
Florida accountant Mirtha Valdes Martin told the Journal that she has frequently seen small business owners use this tactic to avoid a fair settlement.
Martin said that one way to avoid becoming the losing party is to file for divorce first.
Those who suspect their partner may be hiding assets can also seek a settlement that includes even division of assets discovered after the divorce is complete.
There is also the option to hire a private investigator or a forensic accountant to get to the bottom of any suspicions.
Many women in particular are at risk of ending up worse off after divorce
New Jersey divorce lawyer Bari Weinberger says divorcees can regret their financial mistakes
3. Emotion bills
Divorce can be a painful time but experts warn that allowing your emotions to prolong proceedings can rack up ever larger bills.
Maggie Kim, author of the 'Divorce or Die' newsletter, told the Journal that she spent $500,000 on legal fees over a seven-year divorce process.
'Emotions were the biggest reason that my divorce and custody fight took seven years,' she explained.
Now Kim tells her readers to draw on support from their friends and family rather than treating divorce lawyers like therapists.
You won't feel better 'when you get a five-figure bill later because you spent two hours sobbing in their office — again,' Kim said.
4. Illiquid assets
Illiquid assets such as stock options, individual retirement accounts and real estate, can be among the hardest parts of a divorce to settle.
This is because by their very nature they cannot easily be turned into cash and split evenly.
Selling stocks can stop an investment from growing over time and incur heavy transaction fees.
Retirement accounts can also incur heavy penalties if withdrawn before retirement age.
Financial advisor Stacy Francis told the Journal she asks divorcing couples to take all of these constraints into account when deciding how to divide their marital assets.
For example, if illiquid assets are too big of a sum to be able to give up a claim to them completely, then 'it may indeed be worth waiting until they vest, mature or are able to be sold,' Francis explained.
'Negotiating for structured payouts or even a co-ownership agreement can be a creative workaround.'
Maggie Kim spent $500,000 on legal fees over a seven-year divorce process
5. Underestimating expenses
Couples who have been together decades can often forget a time before two incomes.
Individuals going through a divorce may therefore underestimate how much it will cost to run a household alone again.
Major expenses can include housing and health insurance, as well as discretionary spending such as restaurant meals and subscriptions.
Rick Jones, a divorce lawyer from Seattle, told the Journal that his male clients can often misjudge the cost of both child support and running their own home.
'Fathers paying full or partial child support don't anticipate the additional cost of having a home big enough for their kids' visits,' he said.
To avoid financial pitfalls later on, Jones urges divorcing couples to make realistic budgets setting out what cash-flow they will need to cover their expenses.
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