5 Ways to Ready Your Finances for Divorce

One of the most stressful life events that a person can face is divorce. It can leave a person feeling unsure about many things, finances being one of them. Protecting your assets and understanding where you stand financially during a divorce takes some preparation.

Each divorce is unique and comes with its own specific set of challenges. Your divorce may require different actions, but the following is good advice for most people preparing their finances for the dissolution of a marriage. Here are some tips to make untangling your finances more manageable.

Track your spending and try to predict future expenses.

When you realize that divorce is unavoidable, start tracking your household income and the expenses accompanying taking care of your home. Consider expenses like the mortgage or rent, utilities, insurance costs, food, clothing, home maintenance, daycare, extracurricular activities, and entertainment. Using a credit card to pay for everything can make record-keeping easy.

By knowing what you spend and taking into account one-time expenses like repairs to the home or vacations, you can provide the information to your divorce lawyer so they can help you determine how assets should be divided.

Note that the money it takes to raise your children will change as they cycle through the different seasons of childhood. You may buy diapers, pay for daycare during one stage, and buy a car and college tuition at another.

Gather the Necessary Documents

Gather your financial records so you have a clear picture of your family’s financial needs. Start as soon as you can. If you have shared accounts with your spouse, note that the institutions are not obligated to keep requests you make to yourself.

Here is a list of documents you will want to assemble:

  • Your checking and savings account statements from the past 12 months.
  • Current retirement account statements if your contributions have remained the same.
  • Investment account statements for the past calendar year
  • Financial ledgers that provide information about your mortgage or your automobile loans for the past year
  • 12 months’ worth of credit card statements
  • Your past three pay stubs.
  • Create a list of your assets and debts to assess what each partner had before the marriage and what they have currently.
  • A copy of the last three years’ income tax return.

Leave Big Financial Decisions Until The Divorce is Final

To avoid criminal contempt charges, leave the big decisions to the court once you have filed for divorce. In a divorce, all major economic decisions are left to the judge. If you change the beneficiaries on your accounts or life insurance policies, you may appear sneaky or spiteful in front of the court.

By appearing to behave underhandedly, the judge may feel the need to overcorrect the situation in favor of your spouse. It is best to avoid big financial decisions before the divorce.

The court will decide the big decisions about your financial life. Often there will be tax implications. Your divorce attorney can guide you through the process.

Be Prudent About What You Spend and Save

Divorces mean sorting out joint finances. This can be a complicated situation, so it is important not to empty your accounts or use more than you typically would during the time leading up to the divorce. Keep all of your financial matters transparent.

Use your individual and joint accounts as you typically would. If you lack money for your divorce attorney or divorce-related expenses, determine an equal amount you can use for that purpose.

If your relationship has broken down past the point of amicably discussing such things, have your attorney begin the legal separation process. A legal separation will set the parameters for using your money until the divorce is complete.

Seek Legal Help

Legal representation can help you to sort through the specifics of finances during and following a divorce. Having a lawyer should not be seen as hostile but as helpful. Emotions run high in divorce situations, and poor choices are made without a lawyer to offer sound financial advice.

These poor choices can make building a future more difficult. But, with the right legal guidance, you can make choices that will benefit you in the future. The division of assets and debts is best overseen by your divorce attorney since they have experience and expertise in this field.

Talk to Us About Your Financial Concerns

If you are moving forward with a divorce and have questions about how your finances should be handled, reach out to Martin Family Law Group and speak to one of our experienced divorce attorneys to see how we can help. We can help you to navigate this difficult time and help you to maintain the brightest financial future possible.