smart spending

5 ways divorce can cost you

Unequal division of assets
Unequal division of assets © Andrey_Popov/

A couch is a couch -- until it's part of divorce. Before committing to certain possessions, take the time to understand each item's true value to get a fair deal.

"People need to realize there are different values to things that appear to have the same value," says Mark Baer, a family law attorney in California.

For instance, $100,000 in retirement savings isn't equal to $100,000 in equity in a house, says Baer, and the value of both will fluctuate. The full value of the retirement account can't be accessed until a certain age. If you or your spouse dips into it early, you will pay penalties and taxes, reducing the initial $100,000. By contrast, $100,000 in home equity is easier to tap without penalties.

On the other hand, whoever gets the house should perform any due diligence that any third-party homebuyer would do. That means getting an inspection to uncover any deferred maintenance or repairs that may lower the home's value, says Baer.

"Are you paying top dollar for the house?" he says. "Are you making an emotional decision? In many cases, people are."

Be similarly careful about splitting smaller possessions. For example, instead of giving the china to your spouse while you pay full retail price to replace it, Baer recommends each of you take half and pay an equal amount to replace the other half.


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