Filing for divorce is difficult, even when the decision to end your marriage is the right one. Even couples who are trying to end their marriage amicably can struggle with adjusting to their new financial picture. Safeguarding your finances is an important step to ensuring a fresh start.
It’s a good idea to get your finances in order before filing for the divorce. Assuming that you’ll be going from one household to two, you need to understand what your current expenses are and how those expenses will change. Doing a cash flow analysis will help you understand where your money is going every month. Look at the income stream you’ll have after the divorce and what your expenses will be. Decide which expenses are necessary, and which can be considered discretionary. You want to prepare so you don’t encounter any major financial shocks after the divorce. Pay attention not only to the big budget items, but also the small expenses that can add up, such as health insurance, mobile phones, and digital media subscriptions. In the best divorce scenarios, you and your spouse can go through this together before your split, but be prepared to handle this on your own.
Get a credit report and review your activity, go through all your debt and assets, and gather . Include investment accounts, bank accounts, recent pay stubs, loan information (such as auto loans, mortgages, or personal loans), retirement accounts, credit cards, income tax returns, and any other financial information. Separating debt and assets can be a major source of contention during the divorce process. Some spouses are guilty of trying to conceal certain assets so they won’t be divided, but this is never a good idea. Don’t relinquish any control of your assets or investments, and make sure that nothing slips through the cracks. Your due diligence will be well worth the time and effort.
Your attorney may suggest you separate any joint accounts and debts and open accounts in each spouse’s names, but generally speaking, this is the time to wait on making any big financial decisions. You may feel tempted to get ahead of issues by changing the beneficiary on your life insurance, selling property, or transferring large sums into a new account, but be aware of how this could look to a judge during the divorce process. Always talk to your attorney before making any financial moves, and be conservative on how you spend your money. Use the joint accounts for necessary expenses and avoid frivolous spending that could be seen as vengeful.
Even if you and your spouse are hoping for an amicable divorce, expect opposition along the way. Nearly every divorcing couple will have some periods where they are not on the same page. Some amicable divorces will only have a few moments where things turn contentious, but others find that their divorce is not as simple as they hoped. Keep a clear head and stay prepared for everything. Know your financial picture, come up with a game plan for how you will handle your taxes, determine what is most important to you (staying in the house, splitting costs for college for your children, determining who will handle insurance for the children, etc), and prepare for the worst. Having an experienced attorney who can help you through the divorce process is the best way to prepare for an amicable split.
Divorce will impact your finances, but there are things you can do to safeguard your financial future. Having an experienced attorney to guide you through the process will be invaluable to your financial future. If you’re going through a divorce and are looking for a trusted, experienced attorney, contact my office today.