How to Financially Prepare for a Divorce
Divorce is often one of the most devastating things that can happen to your finances. The actual process of divorcing someone can be very expensive, especially if you need to pay legal fees and court costs. After the divorce, you will no longer have the other income provider in your household, if there was one, and you will no longer be sharing the cost of running that household. Preparing for all of these costs and changes requires some significant effort.
Other People Are Reading
Instructions
-
-
1
Determine whether you live in an equitable distribution state or a community property states. If you live in a community property state, you can expect that everything you acquired as a married couple, from property to cars to homes to money to other assets, will be split 50-50. This is true regardless of who paid for the items or regardless of whether you worked or earned money during the marriage or not. The only time things aren't split is if they were owned before marriage or if they fall within a limited array of other exceptions like money inherited and kept separate. If you live in an equitable distribution state, you won't have this guaranteed 50-50 split; the courts will divide everything up "equitably" but not necessarily equally.
-
2
List all accounts, assets and debts. Know exactly what amount of money and what obligations you are dealing with, as well as what property you own to help you come up with an out-of-court settlement with your spouse or in providing the information to the court if it needs to split up your assets. If you do not know what accounts your spouse has, now is the time to find out. Your lawyer can subpoena account records and, in some cases, if money is hidden or you suspect your spouse has secret assets, you may even need to hire a forensic accountant.
-
-
3
Transfer all joint debt into the name of the person responsible for paying it. When you get a divorce, even if your divorce decree says one spouse or the other is responsible for a given debt, if you both signed for it with the creditor, then the creditor is going to hold you both responsible. This means if your spouse doesn't pay when he or she is supposed to do so, based on the divorce settlement, then you could end up with damaged credit.
-
4
Open your own accounts and close joint ones. You should have your own bank account. You should also have your own credit card. This is important if you didn't have one before, since you will need to build personal credit once you are no longer married.
-
5
Create a budget. If your income has gone down to the loss of your spouse or due to the need to pay alimony, you need to take stock of what you can now afford. Your budget should reveal if your lifestyle will be too expensive as a single person. If so, you may need to sell your house or otherwise make cuts to live on your new income.
-
1
References
- Photo Credit Stockbyte/Stockbyte/Getty Images
