What Not to Do Financially In Divorce

 Experienced divorce counsel can guide you to ensure that financial decisions don’t cost you credibility, time, and money. Always consult your attorney before taking any action that would have a significant financial impact, and consider these “what not to do” tips regarding finances.

1. Do not forget to disclose all of your assets, income, and liabilities, and do not attempt to hide them. 

 

You must disclose all assets, income, and liabilities to your divorce attorney and the Court. Failing to disclose them, and especially purposefully trying to hide them, can harm your credibility in court and result in increased legal fees, time, and annoyance.

 

2. Do not gift assets to friends or family members. 

 

Once you file a petition for divorce or are served with a petition for divorce, depending on the county, there may be standing orders that prohibit you from gifting assets to third parties. If you gift assets, the Court could find you in contempt, or you could receive fewer marital assets in the divorce to account for those gifts.

 

Even if the petition for divorce has not been filed yet, you should tread carefully in making any gifts if you are contemplating divorce, or discussing divorce with your spouse and/or an attorney, because the Court may look unfavorably on such gifts. Gifting to third parties is not likely to result in your spouse getting less and may harm your credibility, increase legal fees, and result in a worse outcome for you.

 

3. Do not sell assets, especially assets that your spouse might have a claim to (including jewelry, collections, personal items, etc.). 

 

Normally, you can sell assets if you need funds to pay your reasonable living expenses or legal fees, but you should avoid selling assets if possible. Use funds in bank and/or investment accounts, or consider loans that won’t burden your spouse’s credit rather than selling assets. This is particularly true of assets that your spouse may claim have particular meaning or sentimental value to him or her. If you sell the Vermeer that your spouse received as an inheritance from his great-grandmother to pay your bills, your spouse may be so angry that settling your divorce amicably becomes impossible, resulting in increased legal fees for you as well as significant delays in getting divorced.

 

4. Do not change beneficiaries on life insurance policies or retirement accounts. 

 

Your first instinct may be to change beneficiaries on accounts to cut your spouse off in any way you can. This is unwise and, again, can result in a violation of standing orders depending on the county in which you filed. Once you’re divorced, you’ll be able to change beneficiaries on life insurance policies and retirement accounts without issue.

 

5. Do not remove your spouse or children from coverage under health insurance policies.

 

This includes removing your spouse or children from medical, dental, and vision insurance policies. Some divorcing spouses are concerned that they might miss their employer’s open enrollment period and have to keep their spouse on insurance for longer than necessary, and decide to remove the spouse from medical insurance policies. Finalizing your divorce is a qualifying life event for insurance enrollment purposes, so once you are divorced, you typically have thirty days to make changes to insurance policies.

 

6. Do not make any extravagant or unusual purchases. 

 

Extravagant purchases can damage your credibility in court because such purchases look like an attempt to reduce the marital assets available to be divided. Many significant purchases of personal property also reduce marital assets because they lose value, such as a new car that loses significant value as soon as you drive it off the lot. Wait, and purchase that Lamborghini after you’re divorced.

 

7. Do not quit your job without discussing it with your divorce attorney first. 

 

You may think that quitting your job will result in you paying less in child support to your spouse or receiving more in support from your spouse, but that may not be the case. The Court can, and probably will, attribute income to you if you voluntarily leave your job without moving into a new position soon. This means that the Court will order child support as if you had not quit your job, using your income from your prior job as your income for calculating support. In other words, you may end up paying the same support you would if you hadn’t quit your job, but without the income from that job to pay support. It is also unwise to quit your job and move into a job that pays significantly less because income may also be attributed to you in that circumstance, absent a good-faith reason for the change.

 

Divorces are almost always difficult. Using these strategies and having an experienced team of family law attorneys on your side will make the process easier and help protect you and your business assets. Having an attorney with the resources and knowledge to give you the best representation is vital to your interest and the interest of your family.  You also want to make sure they will exhaust all avenues and be willing to research, pursue and implement strategies to provide the best possible outcome.

Rob McAngus, Partner with Verner Brumley Parker, P.C., is Board Certified in family Law and his practice is devoted primarily to family law, including high conflict divorce, custody cases, and complex property issues. In addition to being selected on the Board of Directors for the Family Law Section of the Dallas Bar Association; he values your priorities as a parent and works with you to achieve the goals that will help transition your family to a new normal.  As both an adopted child and a member of a blended family, Rob can provide a unique perspective in the practice of family law.

Rob has been recognized in Super Lawyers as a Rising Star in 2016 through 2021, and recently The National Advocates recognized Rob as one of the Top 40 Under 40.  He can be reached by calling 214.526.5234 or email at rmcangus@vernerbrumley.com.  Mr. McAngus received his bachelor’s degree cum laude and master’s degree from Baylor University and graduated cum laude from the Dedman School of Law at Southern Methodist University.