Reaching a divorce settlement is never easy. It can drain you emotionally as well as financially. Making decisions can turn out to be quite challenging. You need to be aware of the negotiating tactics and focus on the end objective if you don’t want to regret after signing the settlement. Over 90% of divorce cases don’t reach the court as the spouses tend to settle. In that case, a collaborative divorce process is the only way out. In the majority of the cases, a settlement is reached through one-day mediation and this period can be highly emotional. Hence, you need to keep certain tips in mind to avoid mistakes that most of the people commit.
Be Fully Prepared
You will be highly mistaken if you suppose that things wouldn’t be complicated as much as it would have been if things were settled in court. A settlement out of court is equally complex and requires thorough preparation. Before accepting any kind of settlement offer, you need to be fully aware of where you stand financially.
In case you have kids, you should be considering the visitation schedule that would work in you as well as your spouse’s daily schedules, along with other commitments. Sit down with your attorney and have a detailed discussion about the potential objectives that might come from the other side. You also need to prepare your responses in case of settlement negotiation. Be prepared from all sides.
Never Overlook Tax Consequences
People tend to forget the tax consequences regarding a divorce settlement. This can have financial impacts on the future. If you are a divorcing parent, you and your spouse must decide among yourselves how to split the tax deductions for their kids. The effect of tax deductions on a parent’s income may be less than the other, depending upon their earnings. Aside from this, you guys also need to consider deduction for the interest on the mortgage. If all the deductions are in favor of your spouse, it’s always better to exchange such deductions with something else that you wish to have during the settlement.
Other important issues that you should focus on are child support as well as alimony. Alimony is nothing but an income that’s taxable for the spouse who receives and tax-deductible by the spouse who pays. Exchanging alimony with child support or vice-versa is favorable and might bring around a tax benefit too. All these are important factors that you need to keep in mind at the time of the settlement.
Try To Consider The Case From Your Partner’s Perspective
When you and your spouse decide to part ways, the earnings that used to financially support one family must support two families suddenly. In the majority of the cases, both you and your spouse will experience your standard of living coming down drastically. You need to prepare a budget that will match your oncoming expenses while considering the amount you will be giving or receiving as alimony payments and child support. At the same time, you must also figure out what kind of a monthly budget your spouse is chalking out after the divorce. Aside from being able to plan out a more reasonable settlement, you would also understand what your spouse is going through. This will reduce the pain of your tight budget.
A Negotiation Should Always Be On The Mind
The spouses need to leave some room for negotiation. Especially if they don’t live together. There is nothing wrong in seeking a realistic compromise, since that would be beneficial for both of you, emotionally and financially. If you start your discussions with the bare minimum, you would not have room for negotiation. With your spouse not having much of a say, you will look like someone inflexible. Showing flexibility is important if both of you are eager to reach an agreement. It’s always better to gravitate a bit from your original proposal to a more amicable solution.
Sometimes, overlooking the most basic things can land you in financial trouble making you regret your decision. Regretting, in the end, won’t help. So, be wise!