It goes without saying, divorce is an extremely difficult and emotional journey. It can be overwhelming and it will most likely affect and change many aspects of life including finances. Financial preparation for divorce is crucial in order to move forward in your divorce. Separating finances with two spouses can be messy. In order to do so, each partner needs to prepare in order to ensure security and stability both during the divorce proceedings and after the divorce is finalized.
There are certainly things both parties can do to financially prepare for divorce. Here are some tips for those going through this sticky situation.
Gathering Financial Documents
One of the first steps to do is to gather all financial documents, including tax returns, all accounts including savings, checking and investment accounts, pay stubs, property records (home, land, vehicles) credit card statements, debts, and any retirement account statements such as 4014K plans, IRA’s, or pensions.
This is important for each party to fully understand what they own as individual accounts as well as accounts held together. This is most definitely a daunting and time-consuming task; however it is very important in order to entangle financial ties. In addition, all this information will need to be provided to the lawyers involved for financial preparation for divorce.
Separating Joint Accounts
During the divorce process, if they can agree, both parties might consider separating and dividing joint accounts to protect finances. Opening individual bank accounts as opposed to joint accounts helps simplify the divorce process. Removing your name from a joint credit card account also helps to “clean-up” future charges. Also it would be prudent to monitor your credit report and to set up account alerts which are essential steps in financial preparation for divorce.
Developing a Post-Divorce Budget for Financial Preparation
If you are trying to separate your expenses, consider developing a budget to better understand what your current expenses are and what they may be like after the divorce. Going from a two-income family to a one- income family requires adjustment. By keeping a detailed journal of what your expenses are monthly it helps to be able to adjust to your new financial reality. In addition to monthly household expenses, consider changes and increases in childcare or insurance premiums that may occur post-divorce. Proper budgeting is a key aspect of financial preparation for divorce.
For more detailed financial advice and resources, visit the U.S. Securities and Exchange Commission’s guide on managing your money: Investor.gov – Managing Your Money
Consulting with Professionals for Financial Preparation for Divorce
Take a step back from making major financial decisions. Changes to beneficiaries, wills, retirement accounts, and the like will be sorted out in the legal proceedings. Always consult with an experienced divorce lawyer before doing any of these things. You do not want it to appear that you are dissipating or hiding assets! This caution is part of careful financial preparation for divorce.
In addition to consulting with your attorney about financial division, it may be advisable to consult a certified financial analyst to help guide you. Talking with a financial expert, even if you don’t have a huge amount of assets can be invaluable for financial preparation for divorce.
No matter if your divorce is confrontational or amicable, don’t go it alone.Be sure to talk with an experienced divorce lawyer to protect your rights!
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Attorney Robert “Chip” Mues has been focusing his legal practice throughout Southwest Ohio primarily in divorce and family law matters since 1978. Chip is passionate about family law and has proudly published the Ohio Family Law Blog since 2007. In addition, he is the managing partner of Holzfaster, Cecil, McKnight & Mues. To learn more about him or the law firm, visit the firm’s website at www.hcmmlaw.com. Appointments are available in person, over the phone or by Zoom. Call us at 937 293-2141.
