How to Prepare for Divorce Part 2: Finances
Financial stability is often the top concern of people beginning the divorce process. Aside from custody, the divorce process primarily deals with how to separate spouses’ finances. The result of this process is a major change in the financial picture for both people.
As we mentioned in “How To Prepare for Divorce Part 1: Research & Advice,” being well prepared for the divorce process is one of the best ways you can set yourself up for the future. Taking stock of your financial health is one of the most important aspects to consider during the preparation process.
Securing your finances before a divorce is extremely important, regardless of your current situation. Divorce can be costly, so understanding your financial situation and the potential costs of your upcoming life changes can help put you in a position of financial stability before, during, and after your divorce.
You should discuss your finances with your divorce attorney for specific measures that need to be taken as you prepare to divorce. To begin preparing your finances for divorce as soon as possible, consider the following tips:
Save, Save, Save
Create a savings account that only you can access. In other words, open accounts that are only in your name, separate from the joint accounts you share with your spouse. In your individual account, begin to save your earnings. You certainly don’t want to take out any money from joint funds without your spouse’s knowledge, but you can begin protecting yourself financially by gathering your own funds. Ultimately, your goal is to obtain financial independence and privacy. Also note: don’t hide or fail to disclose assets during the divorce process. Hiding assets can be extremely dangerous and may result in legal repercussions. To avoid any accidental foul play, discuss your options with an attorney.
Establish a Budget
Take stock of your current income and expenses, and price out any new expenses you may take on once the divorce process begins. For example, if you’re be moving out, you will need to pay rent, utilities, possibly need new furniture, or you may spend more money on gas. You may want to get a phone plan separate from your spouse’s.
If you aren’t currently working, you may need to find a job, or you may need to petition for temporary spousal support to ensure you receive compensation if you are unable to work. If, for example, you stay at home and care for your children, you may be entitled to compensation to continue in that role during and after the divorce.
As your expenses are likely to change, create a budget to help you live within your means during the divorce. Also, establish a budget for legal expenses, emergency expenditures, and other potential unforeseen costs.
Keeping your finances in order is about more than just budgeting, it’s about keeping a thorough record of your important economic documents. If you don’t already have all of your paperwork copied and filed, go through your documents and make a separate folder for your own personal records. Locate bank accounts, credit card accounts, loans, tax returns, property statements, deeds, receipts for big purchases, and any other important financial documents and make digital copies and hard copies.
Be Conservative & Mindful
Even if you feel financially prepared for your upcoming divorce, there is always the chance that you could be hit with the unexpected. To ensure your fiscal security during this time, make sure you remain conservative with your finances and always be mindful of your spending.
If you want to make any big purchases, investments, or other significant changes, consult a financial advisor or accountant and your attorney to discover whether or not it would be better to wait until your divorce is over.
Work with Your Attorney on Setting Financial Goals in the Divorce
Start setting goals with your attorney on property division in your divorce. You will need to consider all marital assets you wish to keep, how debt will be divided, how retirement savings will be allocated, whether or not you’re likely to end up paying or receiving child support or spousal support (alimony), and how much it is likely to be. Your attorney can help you understand how the laws apply to your situation and help you set goals that can be successfully accomplished.
If your divorce involves complex assets (like a business, investments, etc.) or you and your spouse have a high net worth, work with and attorney who specializes in financially complex divorce matters. You will likely need to work with a team that involves accountants and other professionals to properly value your assets before they can be distributed.
Protecting what you value most
If you are getting ready to go through a divorce, our attorneys at McKinley Irvin are prepared to help. We have extensive experience protecting the interests of individuals and families just like you, and we know precisely how to help clients prepare for the divorce process. Discuss your specific case with our attorneys.
Contact McKinley Irvin to get in touch with our lawyers.