Financial uncertainty in a divorce can make an already stressful transition one of the most difficult that an individual can go through. The following steps can help you keep your finances intact during and after a divorce.
Identify Assets and Learn How Much Money You Have
As divorce proceedings get underway, take a look at your family’s complete financial picture. Start by reviewing your income and the balance of savings accounts, credit card bills, retirement accounts, investment portfolio, and insurance policies. Next, make a budget that reflects your single income and projected monthly expenses. Factor in costs such as finding new housing or buying a car, as well as both your personal debts and debts you share with your soon-to-be ex-spouse. Identify any gaps in your budget where you come up short and see where you can make cuts to cover the difference.
Get Copies of Financial Statements
Financial documentation is critical in a divorce, as the court will only be looking at your proof of assets rather than how your spouse has wronged you. Gather copies of all tax returns, loan applications, wills, trusts, banking information, brokerage statements, loan documents, credit card statements, deeds to real property, car registration, insurance inventories, insurance policies, and any other relevant financial statements that you may have at your disposal. Avoid relying on electronic copies, since you run the risk of your spouse changing passwords and locking you out of your joint accounts.
In addition, find any records that can be used to trace your separate property, such as an inheritance or gift from your family, or property acquired prior to the marriage. These assets will remain yours as long as you can document them. If you are concerned about hidden assets, copies of your spouse’s business records could be the key to locating them.
Open Your Own Accounts
Open a new individual account at a different bank and deposit half of your joint account balance. It is common for angry spouses to “clean out” joint bank accounts. Send a written letter notifying your spouse that you’ve taken your portion of the account. Cancel any jointly-held credit cards and inform your spouse after doing so. Check to see if any loans or credit card payments can be frozen until the divorce proceedings are finalized. However, ensure that you keep up with any loan, credit card, insurance, or utility payments that are under your name. Even if you agreed your spouse was responsible for paying that particular bill. Additionally, start a new car insurance policy that is only under your name, as well as rental or homeowner’s insurance.
Think About What You Need Long Term
The costs and financial changes that come with divorce can set back your retirement plan. Check to see if your path towards your retirement will be altered by the terms of your divorce. For instance, you may need to push retirement back by a few years to give yourself more financial flexibility. Once the divorce is final, you may also consider upping your contributions to retirement plans, such as 401(k)s and IRAs. The IRS allows individuals who are 50 and older to make additional “catch up” contributions to save even more toward retirement.
Get Help from a Divorce Attorney & Financial Advisor
Divorce can be very complicated, so trying to do it all yourself is additional hardship to an already stressful situation. Hire a Spokane divorce attorney who can give you excellent advice, and engage a financial advisor to help determine the best settlement options for you. These matters will affect the rest of your life.