Financial Steps to Take Before Getting a DivorceGet Organized. Think about the financial commitments that both of you are planning to make. Apply for a credit card in your name. Think about how much the divorce will cost.
Speaking of credit cards, it's important to protect your credit during the divorce process. You can start by getting a copy of your credit report. You can check your credit report for free every 12 months. Beyond your will, you are likely to have accounts that name your spouse as the beneficiary.
Examples include your 401 (k), life insurance policy, or brokerage accounts. You should change the payee designation on these accounts as soon as possible. When a heterosexual marriage ends, women still tend to experience the biggest drop in their income, with women's household incomes falling by 41%, while men's household incomes fall only 23%, according to research from the U.S. UU.
If you've been considering moving forward with a divorce after the pandemic, listed below are five critical steps all women should take to be financially prepared for this stressful transition. As a financial advisor who has also experienced a divorce, these steps helped me begin my own transition. Renora Nelson is a wealth manager at Merit Financial Advisors, where she helps her clients plan and enjoy their retirement years. With more than 15 years of experience in the financial industry, he holds a bachelor's degree in accounting and has his Series 7, 63, 24 and 65 licenses.
Renora has a 16-year-old son and lives in Georgia. Financial changes will be some of your main stressors, so talk to a financial planner. They have guided other clients through divorce and can help you make good financial decisions. Before you can decide how to allocate your assets and debts, you, your spouse, and the court must have a complete picture of your assets, debts and expenses.
To this end, most courts require each spouse to provide detailed financial disclosure to the court and others. However, whenever possible, provide exact amounts for your expenses. When that's impossible, take a look at the past 12 months and get an idea of your average monthly costs. When recording the expense, note if it is accurate or estimated.
If others pay any of these expenses, for example, if your parents help you with your home payments, take note of the amount and frequency of these third-party contributions. Divorce can create financial insecurity, especially if you rely on your spouse's income to cover personal and household expenses. Most states allow dependent spouses to seek financial support, sometimes called support or alimony, during and after a divorce, but in no state is receiving alimony a guarantee. One of the best ways to become financially independent from your spouse during and after a divorce is to create a budget.
Start by Estimating Your Post-Divorce Income. Use the information you have collected about your expenses and debts to see how they balance with your income and assets. By doing this exercise early in your divorce, you'll have a better idea of how much alimony you might need to file for. In addition to monthly household expenses, you should plan for divorce-related expenses, such as court costs and attorney's fees.
The court does not require you to hire an attorney, but if your spouse refuses to cooperate or, if negotiations are impossible due to lack of communication or domestic violence, hiring an experienced lawyer could greatly increase your chances of obtaining a fair divorce settlement. In addition, you may be able to request a court order for your spouse to pay all or part of your attorneys' fees and court costs, so keep a careful record of everything you spend. For those who have decided to file for a divorce, one of the most important first steps is to provide detailed financial information to their attorney. A family law attorney will want you to come prepared with a complete list of your assets and debts, as well as your income and expenses.
Remember, lawyers charge hundreds of dollars in hourly fees, so the more information you can provide them up front, the less money you'll spend gathering this information. If you don't have a documented balance sheet, start now and update it every year. Mint is passionate about helping you achieve your financial goals through education and with powerful tools, personalized information and more. An increasing number of people are contacting them to ask if a divorce is financially viable, sometimes even before contacting an attorney, according to Carol Lee Roberts, president of the Institute of Divorce Financial Analysts.
Howard Hook, CPA, CFP, of EKS Associates tells Financial Advisor: “Although every divorce has its own unique set of circumstances, the most universal problem affecting couples is time, or specifically, lack of it. During this time, you should research and assemble a team of professionals you will need, such as a marriage counselor, a divorce lawyer, a financial advisor, and a tax professional. The “spouse” is the one who has the experience and relationships to make the post-divorce financial transition without starting from scratch. If you are not sure if you should move money, change accounts, or make any other financial movements before the divorce, consult with an attorney licensed in your state.
If you don't know where to start with your personal finances, ask your lawyer if they can recommend a financial planner, especially one with experience in divorce-related financial planning. It's important to prepare mentally and emotionally for a divorce, but preparing financially is critical to your success and well-being. Therefore, regardless of your current relationship with your spouse, you should take steps to gather as much information as possible on this financial checklist for divorce. It's easy to let emotions take hold and neglect personal finances during a divorce, but keeping a clear mind and relying on advice from professionals will help ensure the best possible financial future.
But if you plan ahead and prepare financially for a divorce, then you may be able to maintain a strong financial foundation. Financial counselors experienced in helping older adults going through divorce can help them create a plan to minimize disruption to personal finances and life goals. For example, your divorce team could include your lawyer, a certified divorce financial analyst, and a private investigator, all of whom can help you get a clear picture of the assets and debts that make up your marital estate. Fights over money are one of the main causes of divorce, and finding your financial basis afterward can be scary.