Managing Your Finances Before, During and After Divorce

September 16, 2012

Managing Your Finances Before, During and After Divorce

The emotional aspects of divorce can overwhelm the importance of financial planning when facing the dissolution of a marriage. However, by beginning from the start to consider the financial aspects and consequences of divorce, a soon-to-be ex-spouse can ease the transition to single life and even reduce the emotional stress associated with divorce.

At the Beginning

As soon as a spouse files for divorce (or before the filing, if possible), each spouse should begin to think about their finances. The most important step is to begin collecting documentation. This can encompass a wide variety of legal and financial information, but will certainly include:
-Income tax returns for the last three years
-Income information for the household
-All bank information for each spouse
-Pension and retirement account information
-Personal property tax returns
-Credit card statements and an itemized list of other debts
-Business ledgers if one spouse owns a business
-Other financial information as appropriate

In addition, before or at the beginning of a divorce, running a credit check can ensure that each spouse is aware of all outstanding credit attributable to each spouse. The reason to compile information on finances and debt is simple: Unless the entire financial picture for the household is clear, there is a potential for unfairness when dividing marital property and awarding alimony (spousal support).

During Divorce

During divorce proceedings, it is beneficial to establish a separate financial entity. Common steps for financial independence include establishing a sole checking account at a different bank than one containing a joint marital account and meeting with a financial planner to discuss future monetary needs.

Having a budget and knowing the expenses of life after divorce will make it easier to know exactly what is needed in property division and alimony negotiations. Knowing whether it is fiscally manageable for one spouse to keep the marital home, for example, can greatly help ease the financial transition to single life. Frequent discussions with your divorce lawyer also can help to plan a manageable fiscal future.

After Divorce

The financial impact of a divorce does not necessarily end after the divorce is final. If life circumstances change, such as with the loss of a job or if a disability occurs, it may be possible to modify an alimony order. In addition, retirement benefits and pension plans are subject to property division in a divorce and can be used long after the divorce is final. Finally, Social Security benefits are available to an ex-spouse, so long as the marriage lasted for 10 years, even if one of the ex-spouses has remarried.

If you are contemplating divorce, contact an experienced divorce lawyer who can help you ensure you are financially secure after the end of the marriage.

Article provided by O'Connor and Ryan, P.C.
Visit us at http://www.oconnorandryan.com