A divorce is a major life transition, full of stress and a variety of feelings, including anxiety and worry. It is common to have some concerns over how a divorce will affect your finances and what legal action you might need to take to protect yourself. Consulting with a competent legal expert will ideally ensure fair representation of all parties during property division, but here are some points to safeguard your financial future during a divorce.
1. Make a List of Jointly Owned Assets
If you own property, accounts, collectibles, antiques, or anything else of value jointly with your ex-spouse, make a list of each and get detailed photographs of each item if possible. In this way, one party cannot claim that the item doesn’t exist or avoid having it considered during the division of property phase of the divorce.
2. Know Your Account Balances
On the date of your legal separation, print out the balances of all accounts everyone holds especially joint accounts. This includes bank accounts, investment accounts, lines of credit, balances on loans, and credit cards. This helps guard against one spouse emptying an account or running up a debt the other might have to pay.
3. Be Familiar With the Tax Implications
Your tax status will change after a divorce is finalized. Make sure a tax expert explains everything to you, including the necessary steps after dividing any assets. If you own a business or home with your former spouse, these need to be considered.
4. Be Transparent
Do not attempt to hide any valuables, accounts, or anything of value that might be considered community property. If discovered, this will only cause legal trouble for you during the divorce proceedings. Hiding assets tends to only escalate bad feelings and result in retaliation between the two parties. As tempting as it might be to hide money, the better strategy is to open a separate account.
5. Open Separate Accounts
As soon as you know you will divorce, open a bank account in just your own name and arrange to have your paychecks go there. You want to ensure you have control over the money you earn and have accurate statements of income and assets come tax time.
6. Update Your Will
You should update the legal documents pertaining to your estate, particularly if you have a living will. You will need to change any accounts, insurance policies, or other assets that your former spouse was the beneficiary of.
7. Seek Legal Advice
A good divorce attorney can help you navigate the legal and financial waters of separating from your spouse and protect your assets during the process. A legal expert can assist you with any child support or alimony agreements, as well as seek legal protection for your finances. Even if you are going through an amicable divorce, it’s important to be proactive for both you and your partner’s sake.
A divorce is a trying time, both emotionally and legally. The process of untangling your financial history from another person’s is difficult but necessary. Done correctly, however, your finances can be protected.
