I have seen a recurring pattern in many Maryland divorce property settlement negotiations. Whether it is a Collaborative, Cooperative, Litigated, or Mediated case, these mistakes do nothing but delay the inevitable and increase the costs of the divorce.

Holding on to the garden hose

Financial divorce mistakes Annapolis MDA divorce attorney told me about a case where the spouses were trading property and rapidly coming to divorce property settlement. Literally, the last item to be disposed of was an extremely valuable (I suppose) piece of household equipment-the garden hose. Feeling that she had been “hosed” in the process, the wife kept the negotiations going for hours.

I use the garden hose now as a metaphor for common issues, e.g. the last $50 of alimony payments, the property settlement date, the bookshelf, etc. I always encourage my clients to be cost-effective in their negotiations, look toward the future, and buy a new hose.

Assuming/Asserting re-employment

In determining Maryland alimony and child support, attorneys and their respective clients are quick to assume that an unemployed spouse can be quickly re-employed or employed for the first time (i.e. stay-at-home spouse). I’ve been involved in cases where husbands maintain that the stay-at-home mom can make a sixfigure income even if she has been unemployed and out of the job market for twenty years!

The national unemployment rate is still over 8%. Newpapers have reported that some employers are not interested in hiring the unemployed. There are a rash of college graduates that have the knowledge, skills and staying power that are more attractive to potential employers. This stance, once agains delays settlement and increases the cost of divorce.

Starting from the Net

This is one of my pet peeves and a real time waster – basing monthly support upon the bi-weekly pay stub. Take your pick as to the reasons why this is not an accurate picture of a spouse’s income – taxes are being over/under-withheld, the paycheck may include voluntary deductions for retirement, etc., the tax effect of alimony has not been determined, and the pay is not annualized (bi-weekly equals 26 times divided by 12 not two times monthly).

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Assuming either spouse can refinance

Refinancing the family home is not easy as it once was. The documentation required and criteria for income, home value, the debt-to-income ratio, etc. have all been modified. Pre-qualification of the purchasing spouse must be done prior to any negotiation or time and fees will be wasted.

Ignoring tax factors

Although there are no taxes on property transfers incident to a divorce, income taxes affect most post-divorce financial issues including the sale of the one-time family home, alimony, retirement plan withdrawals, basis of property received, and professional fees incurred to obtain the divorce.

John Faggio is a Certified Divorce Financial Analyst™ and a Maryland divorce CPA specialist serving Howard, Montgomery, Anne Arundel, and Baltimore County. Email or call John at 410-988-7333 to avoid making critical mistakes in your divorce settlement negotiations.