Using Joint Finances During a Divorce

Divorce can be an extremely emotional journey. Divorce also causes a major financial transition for both spouses and the entire family. Figuring out how to manage finances after divorce is an essential step you need to take if you are getting divorced. Addressing shared accounts, income, debts, payment of ongoing expenses, and any shared property requires careful planning and open communication to help make sure that the process is fair and both parties find the outcome fair and equitable.

The Importance of Transparency

The first step you need to take when managing joint finances during a divorce is to establish full transparency with both your partner and the lawyers you are working with. You should review all shared accounts, assets, and liabilities, including joint checking and savings accounts, credit cards, mortgages, and any other financial commitments that you may be sharing with your former partner. Creating a detailed inventory of assets and debts can help avoid misunderstandings and ensure that both you and your former spouse are on the same page and understand what you will each be getting and responsible for after a divorce.

You should also be transparent about your spending habits during a divorce. The Court may pay extra attention to significant expenditures, particularly if one spouse is suspected of misusing joint funds or attempting to take advantage of the divorce process by using or spending more than what they are actually entitled to. Keep detailed records of all transactions and, if possible, seek mutual agreement on major financial decisions before making them.

Handling Joint Bank Accounts

Joint bank accounts are often the main source of household funds. Deciding how to manage and divide those accounts during a divorce is crucial. Some couples choose to freeze joint accounts to prevent either party from making unauthorized withdrawals, while others may agree to divide the balance equitably and use separate accounts going forward. Either way, you have to make sure that both parties find the solution fair and agree to the terms of it, or you will just be wasting time, or worse, get into legal trouble with the Court.

It is also important to follow the advice of legal counsel before making any changes to joint accounts because doing so may have drastic financial implications for you. Any unauthorized actions could be viewed negatively during the divorce process and might affect the final settlement or judgment of the Court.

Managing Shared Debt and Obligations

Credit cards and other forms of shared debt often pose big challenges during the divorce procedure. Since both names are typically tied to the account, both individuals remain legally responsible for paying off the balance, regardless of who incurred the charges. Failing to address joint debt during a divorce can have long-term financial consequences, including damage to credit scores and financial disputes even post-divorce. Repaying credit cards and other debts may also become more complicated because a spouse may seek contributions to any of their personal debts. Importantly, the debt being in only one spouse’s name does not necessarily mean that the other spouse will not be obligated to contribute to repaying it.

Freeze Joint Credit Cards

Closing joint credit card accounts can help you prevent additional charges and may limit further debt issues with your former spouse.

Assign Responsibility

Work with your attorney or mediator to assign responsibility for paying off joint debts. This may involve one party taking on specific balances or dividing the debt equally.

Refinance or Transfer Balances

When possible, it may be wise to transfer joint debt to individual accounts. This ensures that each person is solely responsible for their share of the debt moving forward.

Establishing New Financial Boundaries

As you navigate the divorce process, establishing new financial boundaries is crucial. Opening individual bank accounts and applying for personal credit cards can help create the financial independence you will need after a divorce. It is also a good time to reevaluate your budget, taking into account changes in income and expenses. Divorce will have a big impact on your financial life, so it is crucial to take the necessary steps to prepare your finances for the future.

Contact Us to Learn More About Divorce Procedures and How to Navigate Using Joint Finances During the Process

Navigating a divorce and the changes that come with it can be extremely challenging for both spouses and their loved ones. Getting a divorce will also have huge implications for your finances. Thus, it is important to make sure you are ready for these changes and are satisfied with the way you and your former spouse decided to separate your finances. Reach out to a family law attorney at Moskowitz Law Group today to learn more about how we can help you protect yourself financially during your divorce.