In the second part of this two-part series, you will learn about financial pitfalls to avoid in the divorce process. Experienced divorce counsel can guide you to ensure that financial decisions don’t cost you credibility, time, and money. Always consult your attorney before taking any action that would have a significant financial impact, and consider these top 10 “what not to do” tips regarding finances.

1. Do not forget to disclose all of your assets, income, and liabilities, and do not attempt to hide them.

You must disclose all assets, income, and liabilities to your divorce attorney and the Court. Failing to disclose them, and especially purposefully trying to hide them, can harm your credibility in court and result in increased legal fees, time, and annoyance.

2. Do not gift assets to friends or family members.

Once you file a complaint for divorce or are served with a complaint for divorce, Supplemental Probate and Family Court Rule 411 (“Rule 411”) goes into effect and prohibits you from gifting assets to third parties. If you gift assets, the Court could find you in contempt, or you could receive fewer marital assets in the divorce to account for those gifts. Even if the complaint for divorce has not been filed yet, you should tread carefully in making any gifts if you are contemplating divorce, discussing divorce with your spouse and/or an attorney, or engaging in divorce mediation, because the Court may look unfavorably on such gifts. Gifting to third parties is not likely to result in your spouse getting less and may harm your credibility, increase legal fees, and result in a worse outcome for you.

3. Do not sell assets, especially assets that your spouse might have a claim to (including jewelry, collections, personal items, etc.).

Although Rule 411 allows you to sell assets if you need funds to pay your reasonable living expenses or legal fees, you should avoid selling assets if possible. Use funds in bank and/or investment accounts, or consider loans that won’t burden your spouse’s credit rather than selling assets. This is particularly true of assets that your spouse may claim have particular meaning or sentimental value to him or her. If you sell the Vermeer that your spouse received as an inheritance from his great-grandmother to pay your bills, your spouse may be so angry that settling your divorce amicably becomes impossible, resulting in increased legal fees for you as well as significant delays in getting divorced.

4. Do not assign interests in assets to friends or family members.

This is also a violation of Rule 411 and can result in the Court finding you in contempt or awarding you fewer marital assets overall. Assigning interests in assets to third parties will not result in your spouse getting less and may hurt you in the divorce proceedings.

5. Do not incur debts that burden your spouse’s credit.

This is another violation of Rule 411. If you have to incur debts to pay expenses, do not incur any debts that could burden your spouse’s credit – such as a home equity loan on your house – but consider whether you could borrow money from family members, or if necessary, from a 401(k) or life insurance policy in your sole name.

6. Do not change beneficiaries on life insurance policies or retirement accounts.

This is another Rule 411 violation. Your first instinct may be to change beneficiaries on accounts to cut your spouse off in any way you can. This is unwise and, again, can result in the Court finding you in contempt. Once you’re divorced, you’ll be able to change beneficiaries on life insurance policies and retirement accounts without issue.

7. Do not remove your spouse or children from coverage under health insurance policies.

Again, this violates Rule 411. This includes removing your spouse or children from medical, dental, and vision insurance policies. Some divorcing spouses are concerned that they might miss their employer’s open enrollment period and have to keep their spouse on insurance for longer than necessary, and decide to remove the spouse from medical insurance policies. Finalizing your divorce is a qualifying life event for insurance enrollment purposes, so once you receive the divorce judgement, you typically have thirty days to make changes to insurance policies.

8. Do not make any extravagant or unusual purchases.

Extravagant purchases can damage your credibility in court because such purchases look like an attempt to reduce the marital assets available to be divided. Many significant purchases of personal property also reduce marital assets because they lose value, such as a new car that loses significant value as soon as you drive it off the lot. Wait, and purchase that Lamborghini after you’re divorced.

9. Do not quit your job without discussing it with your divorce attorney first.

You may think that quitting your job will result in you paying less in alimony and/or child support to your spouse or receiving more in support from your spouse, but that may not be the case. The Court can, and probably will, attribute income to you if you voluntarily leave your job without moving into a new position soon. This means that the Court will order alimony and/or child support as if you had not quit your job, using your income from your prior job as your income for calculating support. In other words, you may end up paying the same support you would if you hadn’t quit your job, but without the income from that job to pay support. It is also unwise to quit your job and move into a job that pays significantly less because income may also be attributed to you in that circumstance, absent a good-faith reason for the change.

10. Do not forget to change your estate plan.

Although Rule 411 prohibits changing life insurance and retirement account beneficiary designations, you can and should change your estate plan once you file for divorce or are served with a complaint for divorce. You won’t be able to disinherit your spouse completely, but you can reduce what they will receive from your estate in the event of your death. Although it’s unlikely, if you die before you’re divorced, your spouse will receive their share of your estate under your prior estate plan, or if you don’t have an estate plan, they may receive significant assets as an intestate share of your estate. You should consult an experienced estate planning attorney to determine an optimal estate plan to put in place until the divorce is final. And once the divorce is final, you should change your estate plan again, as you’ll be able to make an estate plan that leaves nothing to your former spouse if you wish to do so.