Four Financial Moves to Make Before a DivorceBy Moskowitz Law Group, LLC |
Even a minor monetary misstep can be costly in a divorce. To best financially prepare yourself for a divorce, here are four important steps you should take.
Get Organized and Gather Documents
Divorce is not only the legal separation of two people, but it is also the separation of a couple’s finances and assets. Financial documents are imperative to the divorce process because the courts rely on them to accurately assess the couple’s financial situation and determine how assets will be divided in an equitable way.
These documents detail the financial history of your marriage over the years. Some of the most crucial ones to include in your portfolio are checking and savings account statements, retirement account statements, investment account statements, paystubs, income tax returns, and other documents regarding important assets or debts.
It can be a time-consuming process to gather these documents, so be sure to start as early as possible. Once you have collected all the necessary documents, it is imperative to keep them as organized and up-to-date as possible so that you are able to provide them to the court if requested.
Track Your Finances and Create a Budget
Using the documents that you gathered, you should take inventory of your existing finances and monitor any monetary decisions going forward. This tracking should entail both income and household expenses such as food, transportation, home maintenance, childcare, clothing, entertainment, and any other miscellaneous bills.
These expenses can further assist the judge in determining how to split assets and whether spousal and child support are necessary. These past finances can also help you establish a future budget.
This post-divorce budget should include your regular monthly expenses and also leave room for unexpected costs that may arise. Circumstances can change and the unexpected can happen, so it is best to leave some cushioning in your budget when possible.
Spend Mindfully and Hold Off Big Financial Decisions
At the start of a divorce, it is common for couples to have joint accounts, meaning both you and your spouse’s names are tied to the account, regardless if it is an asset or a liability. If possible, try to agree to close or freeze these shared accounts, such as joint bank accounts, credit cards, and other lines of credit, and open individual ones as you await your divorce.
If a spouse continues to utilize these joint accounts in an unnecessary or irresponsible manner after you have agreed to freeze them, document the transactions as possible evidence to use once the case goes to court. The court will determine how assets or debts in any joint ventures will be split.
Decide What Assets Are Worth Fighting For
Divorce is not only the legal separation of two people, but it is also the separation of your finances and assets. Before beginning a divorce, it is key to understand exactly what financial obligations it may entail. While the divorce itself causes expenses, including legal fees, couples will also likely have to split their joint assets.
To best prepare yourself, determine which assets are worth fighting for, such as your house, business equity, retirement assets, or other personal property. When considering which assets to pursue, make sure that you understand what it is actually worth and try to think beyond the emotional face value of any property. By recognizing an asset’s market value, you may better understand how its ownership, or loss of ownership, may financially affect you. Furthermore, determining which assets are worth fighting for may help keep your legal fees down.
Seek Help from a Qualified Divorce Attorney
Getting a divorce is expensive and untangling a couple’s finances is a complex process. It is common for couples to accrue substantial assets over the course of their marriage and the division of these assets may not be a discussion that can easily be negotiated over the kitchen table.
Seeking help from a lawyer or financial advisor is often the best course of action for many couples. Skilled legal professionals can help you understand the monetary value of your property and ensure that you receive the assets that you are entitled to. Call today to set up a consultation with one of our divorce attorneys and learn more.