Pennsylvania couples facing divorce should avoid a few common financial errors. One of those mistakes is not taking out a life insurance policy on an ex-spouse who is paying child or spousal support. This insurance can protect against loss of income in the event of the ex-spouse's death.
Another common mistake might be keeping the home. This may seem like a fair exchange with a spouse who takes a more liquid asset such as a brokerage or retirement account. However, it is important to calculate the cost of home maintenance in assessing its value. Furthermore, a person who takes the home should make sure that it is possible to pay for its upkeep on just one income.
A retirement account with the same amount of money in it as a checking account may not be worth as much as a liquid asset to the person who gets it. If it is a 401(k), the person who keeps it will have to pay regular income tax on any withdrawals. If the couple decides to split the 401(k), they will need a qualified domestic relations order. This will allow a withdrawal without a penalty. The withdrawal must then be rolled into an individual retirement account within a specified time period.
A high-asset divorce may involve more complexities in property division. Real estate holdings, valuable collections and businesses may all be involved. Despite this complexity, couples may still be able to negotiate property division with the assistance of their respective attorneys. Even in a contentious divorce, this approach is often preferred by couples because they have more control over the outcome. Once the case goes to litigation, they may no longer have any input into the final decision.