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How to Protect Finances Before Divorce

how to protect finances before divorce

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Among the many reasons why married people choose to separate, financial issues are among the top five on the list.

Both parties are often stuck at an impasse as to who gets financial assets and divorce settlements during divorce proceedings. Different assets get impacted by a divorce. Some of them include:

  1. Checking account
  2. Savings accounts
  3. Retirement accounts
  4. Joint accounts
  5. Retirement assets
  6. Vehicles
  7. Family businesses and practices

 In this article, we discuss how you can protect your money during separation or divorce.

How to Financially Get Ready Before Filing for Divorce

how to protect finances before divorce, seek legal advice

It is wise to think long and hard about the financial impact a divorce will have on your family and work life. We know it is hard to decide on assets, especially when it comes to someone you are particularly fond of, which is why seeking legal aid is advised. When there are children involved, their welfare has to be taken into consideration.

Divorce lawyers are adept at handling divorce financial issues. They will guide you through avoiding the common pitfalls people experience. A lawyer will also help keep your best interests in focus.

Get a Prenuptial Agreement Signed

Starting the conversation about a prenuptial agreement is one of the toughest but best decisions before marriage. You must have this conversation with your spouse before you sign the marriage certificate. It is uncomfortable at the moment, but it saves everyone the trouble in a divorce settlement.

If you already have a prenuptial agreement signed, you should go over the contract to understand your financial expectations. Already married and wishing you got one signed? No need to worry; you can get a postnuptial agreement signed any time during your marriage. Legal advice is crucial when drafting these agreements.

 Evaluate Your Personal Property

It is time to get your accounting books in good working order. During divorce proceedings, your assets will be put under a microscope to determine which property is solely yours and which you own jointly with your partner. If possible, get a financial analyst to help you get a firm grasp of your financial situation. Once you have a clear understanding of your personal and marital assets, you can better understand how your finances will look after the divorce.

A financial advisor will inform you about the difference between marital assets and separate property. Separate property includes items like;

  • An inheritance
  • Property owned by one spouse before marriage
  • Gifts from friends to one spouse 
  • Payments received from personal injury lawsuits

Take a Look at Your Marital Assets

how to protect finances before divorce, evaluate your personal property

Marital property is often divided equally between both parties. After filing for divorce, the court will consider several factors when deciding how the marital assets are divided. These factors include;

  • The age, physical and emotional health of both parties
  • The ling standards during the marriage
  • How long the marriage lasted
  • Earning potential and current income of each party

Taking stock of these assets keeps you updated on how your finances will look like after the divorce settlements.

Close All Joint Credit Cards

This step is critical, especially if your partner has a vendetta against you. To separate your spending from theirs, all you have to do is call the credit card company and make arrangements to close the joint bank account at the earliest convenience. Before you end the call, ask the bank to send you written confirmation that the account has been closed. This step helps do damage control. You can go ahead and apply for your bank account and a credit card where you can keep your money separate.

Protect Your Data and Other Documents

If your partner or spouse is privy to your passwords or sensitive information, you should work on encrypting your data afresh. Make sure that your passwords and bank pins are secure. Do not forget to secure your mail. It is understandable if you stay focused on building an independent financial identity for yourself, and it would be best to keep everything close to your chest. If you do not have a private mailing address, now is the time to get one.

Have You Looked at Your Credit Report?

I hate to be the bearer of bad news, but your spouse’s bad credit score damages your own. If you have been blissfully ignorant about the state of your credit score, now is the time to get curious about it. Your spouse may have been living a life under wraps that you are not aware of. Your credit report will shed some light on your current credit score, giving you a chance to get out ahead of the situation. It’s also important that you check on your joint credit accounts. 

Keep Separate Bank Accounts

Experts suggest that keeping secrets in marriage spells doom for the couple. We still think you should keep a secret bank account from your spouse. If all goes well, you get interest accruals and surprise your significant other at a later date. If you end up filing for divorce, you have a neat little nest egg to help you ease into life after the actual divorce.

No, You Do Not Need to Pay for Alimony

how to protect finances before divorce, pay little to no alimony after the divorce

Most people think that it is mandatory to pay for alimony. This ideology is false. You do not need to pay for alimony and certainly not for the rest of your life. Your divorce attorney should negotiate favorable terms for the divorce allowing you to pay little to no alimony after the divorce. 

Change Your Insurance Plan

It is time to end any correlation benefits between you and your soon-to-be ex-wife or husband. The fact is you do not need to pay for anyone’s car insurance anymore, so don’t. You can stop payment right now. It might not seem like much, but a couple of hundred bucks every month can accumulate to a substantial amount in a few months. 

The Bottom Line

Expect that the divorce process will leave you a little bit financially scathed. It can’t all be a bed of roses. Look at the brighter side; you get to start life on a clean, peaceful slate. Getting a divorce is hard enough. It is even harder if you lose half your assets in the process. Do not let that happen; get yourself the best divorce lawyer and fight for your financial health.  

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Since 2012 the Divorce Mistakes Network has been delivering valuable information to our readers about divorce. Today we have a team of expert faculty who are giving of themselves to help you succeed in your life before, during, and after divorce.

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