When you’re considering divorce, money may be the last thing on your mind. It’s normal to be preoccupied with your children, your future, and the emotional aspects of divorce, but don’t forget to consider your finances before you move forward. In reality, many couples struggle with their finances in the aftermath of a divorce. Keep these tips in mind to make sure you’re financially prepared.
1) Separate Your Accounts
First things first: you’ll need to have your own separate bank accounts after the divorce is finalized, but you should start now to head off any potential conflicts with your spouse. Open individual checking and savings accounts in your name only. Eventually you will also need to close joint accounts or remove your spouse’s name from shared bank accounts and credit cards.
2) Keep Track of Your Credit
In addition to bank accounts, you’ll want to start establishing credit in your name only. Open a new credit card and use it to build your personal credit history. You should also check your credit report as soon as possible to check for discrepancies, pay outstanding debts, and get a good assessment of your financial situation.
3) Start Cutting Expenses
In a situation like divorce, you need to face the money as well as the music. Understand that you may not enjoy the same standard of living that you had while married; at least not right away. To plan ahead for expenses like child support, attorney’s fees, and court costs, as well as the cost of living on your own, you should take a hard look at your expenses and see where you can save.
4) Take Inventory
Another important step involves gathering your financial records and taking inventory of your assets. If possible, collect about five year’s worth of documents—like payroll stubs, bank statements, tax returns, insurance records, benefits information, and investment accounts—and make copies that you will keep outside of the marital home. You should also inventory your assets, including any separate property you owned before marriage or inheritances given only to you, and perhaps even take date-stamped photos of valuable items like jewelry and antiques, just in case.
5) Start Retraining
If you spent a good part of your marriage as a stay-at-home spouse or caretaker for your children, you should start preparing to find a job and establish your financial independence. Take a look at your skills and experience and see if you might benefit from more education or training courses that can help to bolster your resume. As soon as you’re ready, start applying for jobs.
6) Update Your Estate Plan
To prepare for any eventuality, update your estate plan as soon as possible. You may need to disinherit your spouse from your will or trust, or remove their name from any medical directive or power of attorney you may have created. You can also change the beneficiaries on your life insurance policies, pension, 401K, and IRA.
When you’re considering divorce, it’s best to have help from a qualified attorney who understands what you’re going through. Call the Law Offices of Adam Stein to receive personalized guidance for all of your financial and legal concerns.
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