Finances are one of the most contentious issues during a divorce. Where a lot of money is involved, things can get really ugly, pretty fast. How do you protect your finances?
Get Your Current Credit Reports
Marriage inevitably makes you suffer the consequences of your partner’s actions. This is why one of the first things you ought to do is get a copy of the credit reports belonging to you and your soon-to-be ex-partner. This way, if you have bad credit because of their actions, you can set out to fix your credit so that your financial future will be secure.
Get a Good Divorce Attorney, But a Financial Planner for Money Advice
A reasonable family law attorney will give you legal advice on the best way forward in your divorce process.
They will point out any blind spots financially speaking and consequently save you a lot of money. You may think that hiring a divorce lawyer may be expensive, but it may save you cash in the long run.
Plus, there are a lot of good, affordable attorneys if you carry out your research. Talk to trusted friends and family for helpful recommendations.
On the other hand, a financial analyst is better prepared in understanding assets like retirement accounts. Both professionals are helpful but specialize in different areas.
Try and Make the Process Affordable
One thing that a good family lawyer will do for you is giving advice concerning the best way to go about the divorce financial aspect. For instance, opting for divorce mediation will save you more time and money than going through the courts. It is always cheaper for both parties to avoid court proceedings unless you have a highly contested separation.
Think of it this way… You spend a fortune getting your divorce but you come out with everything you ever wanted. So in the end what good was getting half of their retirement accounts when in reality you’ve already spent it? It’s better to think smart instead of with vengeance!
Begin to Separate Accounts & Consider Closing Joint Accounts
If you have joint credit accounts, pay your debt and create separate bank accounts. This way, no one has to bear the other’s burden. If the joint credit accounts are still functional, limit the use of your credit cards and keep track of your partner’s spending as well.
If you don’t trust your partner, have the accounts frozen with the help of your legal counsel or by calling the credit card company. Before you close any accounts first consider how it is going to affect your credit and make sure you get all the credit card statements that you don’t already have possession of.
The last thing you want is to increase your joint debt when you need to be creating a solid financial footing for your future. Remember that marital debts, under most divorce laws, will be split between both parties if it is not paid off.
Get a Personal Account for Your Assets
In case you don’t have a personal account, open one to help you keep up with upcoming expenses. In case you need to withdraw any money from joint accounts, ensure you let your partner know about it. This will help you avoid any accusations of trying to hide property.
Having separate bank accounts will avoid any unnecessary “stealing” or “borrowing” that might take place to cover everyday expenses, or items you’re finding that are new living expenses like health insurance or new mortgage payments you hadn’t accounted for. You’ll need to start saving for future expenses and possibly even open an investment account.
Take Account of What Property You Own & What Debt You Owe
Take note of all the valuable assets so that you know what you deserve upon splitting. If you suspect that your partner may try to sell or destroy a piece of marital property, ensure you document it in your property settlement agreements. Take pictures if need be. In case you need to take any of the community property valuables earlier, ensure everyone in the picture is aware. On top of that, do not sell anything from your joint asset pool before the conclusion of the divorce proceedings.
Get a New Mailing Address
If you do not have a personal postal address, it is an excellent time to get one. This will help ensure that all your personal financial information does not end up with your former spouse. Imagine your divorce attorney sending you some important document in the mail and your spouse is reading it before you ever see it.
Avoid the Term “Alimony”
Your divorce expert should be able to point this out for you. When any money you receive in your divorce settlement is referred to as “alimony,” it could fall under taxable income. You will therefore think that you have a certain amount of money, but that is before taxation. When you file your tax returns, you possibly will need to include that income. On the other hand, if you instead took that income from future retirement assets it could provide a better financial situation for you. Make sure you talk to your financial partner first about this or other transactions.
Frequently Asked Questions
Here are some of the other concerns that people raised in line with finances and divorce:
Can I empty our bank account before divorce?
Although it will immediately benefit your financial situation, it is not advisable to do this, especially if it is a joint bank account because it’s classified under marital asset. You will therefore be required to return that money once it is discovered that you took it out. In case you need cash, ensure that your partner and family law practitioner are aware of any activity on the accounts for a smooth and amicable divorce.
Can my spouse take everything in a divorce?
Ideally, this should not be the case. Depending on the financial situation, you ought to get either half of the marital assets or some percentage of it, equitably divided. However, if you are unaware of the assets and financial position of the family when filing a divorce decree, your spouse will be at a great advantage. This is why it is crucial to be constantly aware of what is going on financially, even if you are not in the same place as your spouse. It is even advisable to seek the help of a financial adviser if you aren’t sure.
Is a wife entitled to half of everything in a divorce?
The divorce settlement varies based on what state you reside in. If you are in a state that views property in terms of community and personal, the wife is entitled to half of the community property only. Separate property goes to whoever is listed as the owner. In other states, the property will be divided equitably depending on factors like the length of the marriage, needs, individual assets, and earning capacity.
Is there any way I can protect my finances before marriage?
Yes, there is. One thing you can do is create an emergency fund. This will help you cater to your needs in case anything goes wrong after you are married. Something else you can do is have your attorney draw up a prenuptial agreement. This way, in case you have to get a divorce, everyone knows where they stand financially and what they are entitled to while keeping emotions at bay. The splitting of finances will not be a significant area of contention in this case.
No one gets married expecting to work through a divorce at some point. However, it is vital to be on top of your finances in case divorce is inevitable. Taking the above-outlined steps will help you lose less money in the divorce process.