Pennsylvania couples who are getting a divorce might make costly mistakes if they do not have a good grasp of their finances. They may think primarily of dividing assets in terms of things like their vehicles, their home and their bank account, but other aspects of property division might be more complex.
For example, a 50/50 division of retirement accounts might seem like the fairest option. However, if one person makes considerably less than the other and will take years to rebuild those savings, this might not be the case. Furthermore, some retirement accounts will have tax consequences that make their actual value much lower than they appear. People should find out whether their particular type of account requires a Qualified Domestic Relations Order to be sent to the plan administrator before it is divided.
People should also keep in mind that catastrophic events may occur during divorce proceedings that derail financial proceedings. They might want to take out a life insurance policy on their spouse in case they die before the division of the retirement accounts has gone through or to protect themselves from loss of support payments. They may also want to make arrangements to care for any minor children in the event of their own death.
Dividing property in a high-asset divorce may involve other complications as well. There may be investments, real estate holdings and one or more businesses. One spouse might want a stake in a business owned by another. This may become particularly complex if one spouse is in a business with several partners and the other spouse wants a measure of control within the company. However, with the help of their respective lawyers, the couple might be able to negotiate a settlement that they are more satisfied with than they would be if they proceeded to litigation and a judge made the ultimate decisions.