Helpful Financial Tips on How to Prepare for a Divorce
During a divorce it can seem like your mind is scattered all over the place; you’ll make hundreds of critical decisions that impact how smoothly your divorce goes and your future beyond. These decisions affect not only you but your children and ex-spouse as well. The area of finances is one of the biggest hurdles for both partners during the split. Here are some tips on making the most of things as you separate your assets and debt:
- Get organized.
The more organized you are, the smoother the process will be, which usually results in a better agreement for both sides. Consider working with a Certified Divorce Financial Analyst to help you put together a financial picture.
- Obtain financial records.
If you can, sit down with your spouse to discuss and list out debts and assets. Obtain copies of financial records such as state and federal tax returns, pay stubs, credit card statements, bank account statements, mortgage statements, car loans, etc. Here’s a list of items you need.
- Create a marital budget.
A budget outlining your current situation will be helpful in understanding and calculating what your house’s monthly expenses are for the both of you, as well as what to expect as the monthly expenses after the divorce. During the divorce process, it’s essential that both you and your spouse are on the same page when it comes to spending funds from the same account. If you and your partner are arguing about this, separate your accounts as soon as possible.
- Tackle the administrative work.
You can go through this list of things to make sure you secure your finances. You can address some of these things right away, but others must wait until your divorce is final.
- Close all joint accounts.
- Separate your spouse’s name from credit cards, bank accounts, and employer record.
- Change beneficiaries on your pension, life insurance policies, IRA and 401k.
- Change status on tax records.
- Consult with professional to track alimony, child support, medical and other expenses that could be related to the divorce.
- Think long-term.
This may seem tedious, but think five or 10 years down the road. Is maintaining your current lifestyle and spending habits going to ensure a financially secure future for you and your children? For example, often one spouse will fight for a house that they really cannot afford solo. Generally, each partner in divorce must scale back his or her living at first, so be realistic with yourself and your finances.
If you are going through a divorce and need help assessing what are the best next steps for you to ensure the smoothest process visit our next workshop to ask questions.