Common Money Mistakes to Avoid in Divorce

MPPL Financial CDFA - Divorce Financial Advisor

At MPPL Financial, we help clients during the divorce process. With a Certified Divorce Financial Analyst® on our team, we witness firsthand how emotionally draining and mentally exhausting it is for most people. Many describe the divorce process as a time of feeling frozen, numb, or moving in slow motion.

If you’re contemplating a divorce, or in the midst of one, it is critical to fully understand your finances and assess them with a fine-tooth comb to ensure that your settlement agreement is fair and equitable. Even if you feel like you have full command of the situation, it’s easy to make money mistakes that can make the divorce more difficult than it needs to be.

Ways to Avoid Common Money Mistakes in Divorce

Here are the most frequent money mistakes we see in divorce and some suggested action steps you can take:

  • Underestimating post-divorce expenses. You will be asked to submit a financial affidavit that reflects your expenses after the divorce. This will be used to determine if spousal support is necessary or not.

Thus, it’s imperative that your post-divorce financial affidavit is realistic and does not overlook any expenses. It’s critical to include everything, from your health care deductibles to anticipated home repair charges for the roof you might need to replace next year.

If you underestimate your expenses by $500–$1,000 per month, that amounts to $6,000–$12,000 per year. Think about it: where will you get that extra money once your divorce is final?

On the flip side, when you’re the primary breadwinner, this mistake could lead you to agree to pay maintenance you ultimately can’t afford.

Recommended action step: Consider retaining a Certified Divorce Financial Analyst (CDFA). A CDFA will help you craft your budget, develop your post-divorce financial affidavit, and review it closely to make sure that you don’t leave anything out and that there are no errors.

  • Believing your attorney will handle everything. Many going through divorces fail to realize that theirattorneys are experts in the law, not in finance. Would you ask your doctor for advice about your car? No. So, why would you expect your attorney to be a financial expert? The attorney’s job is to have you complete a financial affidavit and take your word that what you submit is correct. A good attorney will glance over it to check for glaring errors, but that’s about it.

Pensions are among the most commonly misvalued assets we see at MPPL Financial. What’s more, sometimes, the pension is the most valuable asset in a marriage. Attorneys often use a present value statement from a pension plan to determine the value to include as marital property. This method does not take into account what portion of the pension is marital property and/or separate property.

Recommended action step: Retain a CDFA to value the pension properly and make sure that the final valuation considers any and all tax ramifications associated with it.

  • Letting attorneys do the talking for you. The more decisions you and your spouse can work out by just communicating, the more money you’ll save. Sometimes couples can not bear to be in the same room with each other. We try to encourage these couples to consider the cost of relying solely on attorneys to communicate their goals. Why? If you have your attorney relay information to  spouse’s attorney, you can rack up costs upwards of $600 an hour. Such a communication process can significantly increase the overall cost of your divorce.

Recommended action step: Consider working with a CDFA® as a financial neutral to help you both work together to resolve the various aspects of your divorce and act as the source to provide agreed upon settlements to your attorney.

  • Letting your emotions make your decisions. So many people going through divorce just want to “get it over with”. However, this isn’t the time to throw your hands up and agree to a settlement just to be done with it. Such thinking can leave you with not only higher future expenses, but a lot of regret in years to come. In our experience, a 50/50 split of assets is almost never a truly equitable settlement.

Recommended action step: Take a deep breath. Put the emotions aside so that you can consider the impact of these decisions over the long haul.  Making changes after the fact will not be easy and almost certainly costly.  Try to work with your spouse and your professionals to arrive on a settlement to provide the best possible outcome, now and in the future, for both of you. Be sure to hire the right professionals to be by your side and provide the help you will need throughout this volatile time in your life.

Pulling it all together

Divorce is a time of high emotion, combined with significant financial stakes. If you are contemplating, or going through the divorce process, we encourage you to contact us to discuss your situation in further detail. MPPL Financial has an experienced CDFA on our team to work closely with you during this highly sensitive time in your life.

MPPL Financial has offices in Wausau, WI, Duluth and Grand Rapids, MN, and Crystal Lake, IL. While we’re based in the Midwest, we work with clients across the entire U.S.


Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction-based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.