5 Things to Do with Your Finances before You Divorce

Finances before You Divorce

1. What About Joint Accounts And My Individual Accounts? You don’t want an angry or vindictive spouse to withdraw money that may be yours. One solution may be to withdraw your share (usually half) from joint accounts and set it aside in a safe place. Be sure to check with an attorney before taking this action.You need to know if such an action is appropriate. Another option is to ask the financial institution to freeze the account so no money can be removed without the permission of both parties. In some states, your accounts may be frozen by court order when the divorce is filed. If you have authorized your spouse as a user on an individual account, revoke that action. Remember, the terms of the divorce will take into account all funds and decide their disposition so keep very careful records. Also, law differ from state to state so get an attorney’s advice. Continue to be vigilant and monitor all accounts through the divorce process.

2. Know Your After-Divorce Finances. Be very realistic. You may think that you have employment potential if you are not employed or that you can get by with your current salary. Think carefully. If you keep the house, will you have to “buy out” your spouse. You can handle the mortgage, but can you handle the A/C dying unexpectedly? You forgot that your health insurance comes from your spouse’s job. Can you afford to replace it? Being completely realistic about your post-divorce income and expenses with benefit you throughout the divorce and in the future.

3. Do You Have Credit? Have you established credit on your own and in your own name? If you haven’t, apply now. Use those new cards and start establishing credit that’s your own. If your credit rating isn’t good, see what you can do –things like paying off some creditors – to improve it before the divorce.

4. Do You Have Financial Reserves? Worst case – your spouse pulls the plug, moves out and stops paying any bills. You may eventually win support or the courts may make him responsible for part of the debt, but you have to keep your head above water in the meantime. Build up a nest egg on your own so you can get through a hard time if necessary.

5. Do A Complete Inventory. Get your credit reports – your own, your spouse’s and a joint report. Do you know about all the open accounts or are some in your spouse’s name a surprise to you? They’re something you should know and include in the divorce proceedings. Make a thorough list of all credit balances with their account number and amount due. Now due the same on the positive side list all checking, investment and savings accounts (include IRAs and retirement funds) and their account numbers and balance. If you find a surprise – a debt or savings you never knew about – copy the information and review it with your lawyer.

It’s clear that proper preparation is going to protect you during a divorce. Part of the pre-divorce preparations should include finding an experienced divorce lawyer who makes you feel comfortable when you share private information. He or she should be an expert in your state’s laws ad have a good feel for how your courts treat the different aspects of a divorce. Go through all financial information and needs with the lawyer so you both are aware of any potential pitfalls. Preparation will make your divorce easier and help calm financial fears.