Divorce can be overwhelming. Emotions run high, and the legal system can feel confusing. Some people make decisions during divorce that create unnecessary financial strain, weaken their case, or leave them unprepared for life after the decree is signed.
Here are five of the most costly mistakes people make in Minnesota divorces — and how you can avoid them.
1. Ignoring the Tax Consequences
Not all assets are equal once taxes are considered. Dividing property without understanding tax treatment can leave one spouse at a significant disadvantage.
Ordinary income vs. capital gains: Retirement distributions (like from a 401(k) or IRA) are generally taxed as ordinary income. By contrast, selling a house or investment account may trigger capital gains taxes. Two “equal” assets worth $50,000 on paper can look very different after taxes.
Penalties for early withdrawals: Taking money out of a retirement account before age 59½ can lead to both taxes and a 10% early withdrawal penalty if not handled properly.
Exemptions and deductions: Since 2019, new spousal maintenance obligations are no longer deductible to the paying spouse or taxable to the receiving spouse. Many people still assume the tax deductions apply, and this mistake can lead to unrealistic settlement expectations.
Avoid it: Always evaluate the after-tax value of assets. Discuss tax treatment with your attorney and, if necessary, a tax professional before finalizing any property settlement.
2. Undervaluing or Overlooking Retirement Assets
Retirement assets often make up the largest part of a marital estate, but they are also the most complex. Many divorcing spouses focus on immediate property like the house or vehicles while undervaluing pensions, annuities, or defined-benefit plans.
Pensions and annuities: Unlike a 401(k), these don’t have a simple account balance. Their value lies in the future stream of payments. To divide them fairly, professionals often calculate a present value — essentially, how much those future payments are worth today, based on factors like age, life expectancy, and interest rates.
Qualified Domestic Relations Orders (QDROs): Some retirement accounts require a special court order to divide without triggering taxes or penalties. Failing to prepare or correctly draft a QDRO can delay division or cause tax surprises later.
Avoid it: Don’t assume you can “just split” retirement later. Make sure pensions and annuities are valued, QDROs are prepared, and all retirement accounts are properly included in your marital balance sheet.
3. Communicating Poorly (Especially in Writing)
In divorce, words can become evidence. Texts, emails, and social media posts can all end up in front of a judge.
Messages to your ex or opposing party: Angry or sarcastic texts can damage your credibility and suggest you’re unwilling to co-parent. Even “venting” in the moment may be read as hostility.
Communication with your attorney: Clear and direct communication helps your attorney advocate effectively. Withholding important details can cost you time and money.
Social media risks: Posting about your case – or even venting indirectly – can be harmful. Judges expect discretion, and screenshots are hard to explain away later. In custody disputes, you should always assume that your spouse’s attorney has reviewed and bookmarked your social media accounts.
Avoid it: Write every message as if the judge might read it. Use tools like OurFamilyWizard or TalkingParents for co-parenting communication. Keep social media activity neutral and private, and save your venting for trusted friends or a therapist.
4. Hiding Assets or Failing to Disclose Information
Minnesota law requires full disclosure of all assets and debts. Trying to hide accounts, underreport income, or transfer property usually backfires.
The Pooley case: In Pooley v. Pooley, the Minnesota Supreme Court held that hiding assets can result in reopening a divorce decree years later. In that case, the husband failed to disclose assets, and the court awarded the wife a share even after the original divorce was finalized.
Unvested interests: Even if an asset (like stock options or restricted stock units) isn’t fully “vested,” it still must be disclosed. Courts can decide how to fairly divide or allocate those interests.
Avoid it: Always disclose everything, even if you think it’s minor, unvested, or “yours alone.” Transparency protects you from sanctions, having to pay your ex-spouse’s attorney fees, penalties, or reopening of your case.
5. Failing to Plan for Life After Divorce
Of all the mistakes people make in divorce, failing to plan for life afterward is both the most dangerous and the easiest to avoid. Divorce ends the marriage, but it doesn’t end the need to pay the mortgage, keep the lights on, cover health insurance, or plan for retirement. If you don’t think beyond the courtroom, you risk walking away with a settlement that looks fine on paper but collapses under the weight of real-world expenses.
Cash flow matters more than net income: Many people stop at calculating their net income after taxes. But cash flow is about much more – rent or mortgage payments, utilities, groceries, health insurance premiums, child expenses, debt service, and retirement contributions. If those don’t balance, you may quickly find yourself in financial distress. Knowing your “bottom line” after taxes is only the start.
Housing risks: Many people understandably want to keep the marital home, but the real question is whether it will remain affordable after the divorce. Selling a home later can be much more expensive because the sole owner is responsible for realtor fees, repairs, and carrying costs – expenses that could have been shared or addressed during the divorce. If you desire to keep the home, it is necessary to prepare a detailed budget to ensure you will be able to afford it long-term, rather than discovering financial strain months down the road.
In addition, regardless of who wants to maintain the home, it is critical to consider the mechanics of refinancing or assuming the existing mortgage, the costs associated with doing so, and how any marital liens will be satisfied. Contingencies must also be addressed – for example, setting deadlines for refinancing, identifying what happens if refinancing is not possible, and clarifying responsibility for interim payments. Planning for these details during the divorce helps avoid disputes and unexpected financial burdens afterward.
Maintenance isn’t guaranteed: Spousal maintenance can be a lifeline in some cases, but it is never automatic. Courts apply strict statutory factors, and awards are often temporary or limited. Counting on maintenance as a permanent solution is risky. A realistic budget ensures you know whether your lifestyle and housing choices are sustainable even without it.
How I prepare my clients: I don’t let clients go into settlement talks blind. I work with them to create a detailed monthly budget that includes not just income and taxes, but also projected living expenses, debt payments, insurance costs, and even retirement savings. We look at multiple scenarios – what happens if you keep the house, if you sell and downsize, or if maintenance is awarded for a short term versus not at all. This process often highlights risks and helps clients make informed, future-focused choices.
Avoid it: Planning ahead makes all the difference. When you understand your post-divorce budget, you can avoid mistakes in negotiations and prevent painful surprises months later. Sometimes the smarter move is to sell the house or downsize rather than stretch beyond your means. With a clear financial roadmap, you can exit your divorce with stability and confidence instead of stress and regret.
Final Thoughts
Divorce is as much a financial transition as a legal one. Avoiding these mistakes can save you thousands of dollars — and set you up for a more stable future. With the right legal guidance, you can avoid pitfalls, protect your rights, and move forward with clarity.
At Lommen Abdo, P.A., our family law team has decades of experience representing clients in high-stakes divorce and maintenance disputes across Minnesota and Wisconsin. We work closely with clients and financial experts to create compelling budgets that stand up to scrutiny.
If you are seeking or contesting spousal maintenance, contact Lommen Abdo today to develop a strong, evidence-backed strategy for your case.