Preparing Financially for Divorce

January 26, 2013

Making the decision to divorce is rarely easy. Many people are afraid of how they will make it on their own as a single person after having been part of a couple. Often people worry about what their financial circumstances will be after divorce. People considering divorce can take some steps to help prepare financially for divorce and increase their chances of financial stability after divorce.

Gather documents

A critical first step to making financial preparations for divorce is to gather copies of important documents, such as:
- Income tax returns
- Mortgages
- Deeds to property
- Titles to vehicles
- Birth certificates
- Wills
- Trust documents
- Social Security cards
- Bank account statements
- Mutual fund or other investment account statements
- Retirement accounts or pension fund statements
- Life insurance policies

Once people have made copies of these items, they should leave them with a trusted family member or friend, or rent a safe deposit box, to ensure they are secure.

Get informed

In many marriages, one spouse handles the family finances. This can leave the spouse who does not deal with the money at a serious disadvantage when it comes to property division negotiations, because that spouse has no idea of the extent of the family's assets and debts. Some spouses even take advantage of the other spouse's ignorance and hide assets

People should review the family's monthly income and expenditures to develop a clear idea of their financial situations.

Make a budget

During the process of reviewing family finances, people should also develop budgets for themselves for after the divorce. In order to ensure long-term financial security, people need to understand what their living expenses will be when they are single, as well as all their sources of income.

Creating a budget will help people know what they need to ask for in the property division not only to meet their immediate expenses, but also what they will need for their retirement.

Build a solo financial identity

One of the most important things a person leaving a marriage needs to do is to begin building a financial history as an individual, rather than as part of a couple. People should open new savings and checking accounts in their names only -- preferably at a different bank than the one where they hold joint accounts with their spouses. People should also open at least one credit card in their names only.

Finally, people should take the opportunity to review their credit reports to find out what their credit scores are, as well as to have a list of all the credit accounts that they hold jointly with their spouses. If people find inaccurate information on their credit reports, it is vital to dispute it with the reporting agency. Credit scores determine the amount of credit a person can get, as well as interest rates on credit and in some cases ability to rent housing.

Meet with a lawyer

People preparing for divorce should seek the assistance of a seasoned divorce attorney. An attorney can help ensure that property divisions are equitable and can help people navigate the divorce process.

Article provided by Baker Billick, P.A.
Visit us at www.bakerlawfirmpa.com