Divorcing? 15 costly mistakes

Using your lawyer as a financial planner, therapist or messenger. One woman I spoke with ran up $35,000 in legal fees in just two months. Arrangements for her husband's parental visitations were made through their matrimonial lawyers. Attorneys generally charge $200 to $300 per hour ($450 for partners in well-known New York City and Los Angeles matrimonial firms) and are not skilled therapists or certified financial planners. If you need emotional support, career counseling or financial analysis, utilize qualified professionals and save big money in fees.

Accepting a settlement that isn't as good as it seems. Both spouses and children must all make compromises in their lifestyles after a divorce. A settlement that does not give one spouse enough money to live on is likely to go into default. Be fair, but verify the numbers. Get payments upfront whenever possible, even if you get less in total. Secure all payments with assets and insurance.

Disregarding the impact of inflation. The effects of inflation on the cost of a child's college education 15 years in the future, or retirement 20 years hence, can be dramatic. The rule of 72 is a simple way to judge the impact of inflation. If the inflation rate is 3%, the rule of 72 states that prices will double in 24 years (72/3=24). College costs at 5% inflation will double in 14.5 years (72/5=14.5).

Not waiting until a wife is eligible for her husband's Social Security. If a couple is married for 10 years or more, a wife is entitled to receive half of her ex-husband's Social Security at retirement. The husband's Social Security payments are unaffected. It's ironic that the average length of marriage for people who get divorced is 9.6 years. Waiting just six months longer will increase retirement options for a wife with no reduction in her husband's payments.

Forgetting to update estate documents. After heavily contested divorces, many people forget to change the beneficiaries on their life insurance policies, individual retirement accounts and wills. The result is that ex-spouses end up inheriting estates the decedent may have intended to pass along to children, a new partner or a favorite charity.

Failing to adequately insure the divorce settlement. Premature death or disability of your ex-spouse can result in loss of maintenance, child support, college tuition or property settlement. Life and disability insurance can guarantee your payments and your family's security. Also, don't ignore the high cost of purchasing individual health insurance.

Failing to develop a financial plan. One indisputable fact of divorce is that two households cost more to operate than one but income is unchanged. Many people start their post-divorce lives not fully understanding that their settlement must last a significant amount of time -- perhaps the rest of their lives. Financial planning can help people transition from married to single life by prioritizing financial goals, developing realistic expectations and producing written plans for allocation of financial resources.

This article was reported by Lee Slater for divorce360.com.

Updated May 26, 2009

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